Four Steps to Narrow the Skills Gap

In recent years, employers have lived through everything from fiscal cliffs to sequestration, all while dealing with slow job creation and high unemployment. The U.S. economy may be stronger than four years ago, but for the most part employers are sitting on their hands — and their cash — about talent.

Employees sense this malaise, and when given the chance, they will express their disappointment. For the past couple of years, cloud-based talent management software company Cornerstone OnDemand has reached out to U.S. employees to gauge their attitudes about their jobs. The 2013 U.S. Employee Report was conducted on behalf of Cornerstone by Kelton, a public opinion company. Respondents — employed Americans ages 18 and over — shared their perspectives on topics such as performance feedback, training and development, career management and future career plans.

As much as some organizations remain unsure about how to approach talent management, research shows employees remain skeptical about the way they are being treated. Nineteen million report they are planning to change jobs in the coming year (Figure 1). Last year, based on Cornerstone’s research, that number was 21 million. This may be a small improvement, but it isn’t necessarily a clear-cut change of attitude.

What is driving this potential talent flight? Survey results suggest not only is there an increasing absence of ongoing learning and development, but goals seem to be misaligned, as are expectations between managers and employees. Add a lack of individual recognition and performance feedback, and organizations are left with employees who feel unappreciated, unengaged and willing to look ahead to greener pastures (Figure 2).

The results also suggest that performance feedback discussions aren’t happening as frequently as they should be, if at all. For example, one-fifth of employees surveyed said they receive performance feedback once per year, with an additional 13 percent reporting they never receive feedback (Figure 3).

Even when done more than once, the actual performance review experience doesn’t fare much better. Nineteen percent of employees report their employer’s performance review process helps them increase their potential through education and training.

There has been much debate over the annual performance review and whether it is the best way to evaluate and reward employee contribution. Study results seem to support the sentiment that traditional reviews should be retired. But what is often overlooked is the role performance management plays — or should play — in employee development. Performance discussions provide an opportunity for managers to align an employee’s role to business needs and identify an employee’s career aspirations or future potential. It is also a chance for organizations to gain better insight into — and address — skill and knowledge gaps.

Survey results highlight employee unrest and indicate that lack of performance feedback may spark retention issues. But the lack of ongoing performance discussions between business leaders, managers and employees also seems to point to underlying issues that may be causing the skills gap threatening the competitive edges for many organizations.

Competing in the War for Talent
CEOs and HR executives consistently claim they can’t find enough skilled workers. CEOs often use this to explain the challenges they face meeting their objectives and growing their businesses. Despite high unemployment, the ManpowerGroup’s 2012 Talent Shortage Survey revealed that 49 percent of U.S. employers are experiencing difficulty filling mission-critical positions. The most common reasons include lack of available applicants and experience. Some employers blame this on the education system. According to 2012 McKinsey study, “Education to Employment: Designing a System That Works,” 42 percent of employers believe new graduates in the workforce are adequately prepared by their colleges or other training programs.

The competition for people with the right skills and knowledge is fierce in industries such as technology, manufacturing, health care and education. But the skills mismatch ultimately may have a wider impact on employment and business success.

While some employers remain complacent, others are becoming more proactive by partnering with local education institutions to train new workers, developing more flexible work models and exploring new talent markets. For example, a November segment on CBS’ “60 Minutes” profiled a group of manufacturers in Nevada that partnered with community colleges to provide job training required for today’s high-tech factory floors.

Employers should and must use their resources to seek out skilled people at every strata in the labor market. But a single-minded focus on external talent diverts focus from the skills and engagement of existing employees. Only a third of Cornerstone survey respondents received training and development in the past six months. Further, when asked about their employer’s performance review process, only 19 percent said it helps them to increase their potential through education and training.

Narrow the Gap at Home
External job creation is critical for a healthy functioning economy. But in the meantime, employers should stop blaming performance shortcomings on a skills shortage when they are doing little to develop and engage their employees. The goal should be to narrow the skills gap at home to meet looming business challenges.

There are four opportunities for employers to evolve their talent management and development strategies and narrow the skills gap, increase engagement and retain talented employees in the coming year:

• Re-skill high-potential employees and fill critical roles. Organizations should look to their own workforce for high-potential employees instead of relying on external candidates. Re-skilling employees with targeted training helps bolster talent pools and prepare for future needs.

• Coach-style performance management. Rather than waiting for formal reviews, managers need to foster a more continuous, meaningful dialogue with direct reports and create opportunities for real-time performance coaching and one-on-one feedback. Employee goals should be more in sync with business objectives as well as their own career aspirations.

• Crowdsource performance feedback and recognition. Social feeds and badges can help managers extend the feedback loop to other parties, such as peers or project teams, and sharing feedback and recognition becomes more immediate, real-time and relevant. This gives managers better insight into how employees are performing and allows employees to curate positive feedback and kudos in a central location.

• Offer just-in-time training and development. Whether it is through social networks, mobile devices or in the cloud, technologies can make it easier for employees to access the just-in-time information and training they need. When blended with traditional development opportunities, these new ways of learning can create efficiencies and lower costs.

When it comes to retaining employees and keeping them happy, it is not just about raises and promotions. Almost half of Cornerstone survey respondents said having a good manager (48 percent) and feeling appreciated (46 percent) would motivate them to stay. Investing in employee development, encouraging ongoing discussions with employees and managers, and increasing the frequency of feedback and recognition can be good for the business and employees.

The Cornerstone survey surfaced some nagging issues that are hanging around the business landscape, but there are ways to combat these trends to close the skills gaps and retain top talent. However, it will take the right strategies and tools to achieve much-needed results in the quest to remain competitive.

Jason Corsello is vice president of corporate strategy and marketing for Cornerstone OnDemand. He can be reached at