Despite the fact industries such as manufacturing face high turnover and retirement numbers, addressing the skills gap that would fill those vacancies remains a challenge. With two out of every five manufacturing companies averaging 20% turnover each year, that represents 43% 1 of companies in the industry losing valuable skills and knowledge. Manufacturers polled about their top challenges yielded the following result: 99% – finding skilled new hires, 92% – upskilling incumbent workforce, 84% – onboarding new employees. The skills gap is a real threat to growth.1
Embedded knowledge will only benefit a company while skilled employees remain part of their workforce. If those experienced workers or managers move on or retire, they take their knowledge with them creating a skills gap. This resulting Cost of Turnover (CoT) is much higher, and much of that cost is not accounted as business expenses. Some studies (such as SHRM) predict that every time a business replaces a salaried employee, it cost 6-9 months’ salary on average.2 The skills gap significantly impacts the bottom-line.
Lost productivity, use of temporary labor, and loss of opportunity are just some of the factors created by the skills gap which are not tracked by a large percentage of companies in manufacturing industries such as automotive, technology, and aerospace. Although there is a large pool of unemployed candidates willing to fill the roles left vacant by experienced workers, some simply do not have the requisite skills, and companies are struggling to provide training opportunities.
Addressing the Status Quo
A large part of why the skills gap continues to grow is a company must first look at the status quo by examining their current strategies if they expect to address the skills gap. As experienced workers leave, it may be the result of a number of common challenges:
- Management commitment to a people strategy;
- Time – making the time for training;
- Budget to invest in learning and development;
- Company culture – incorporating a learning environment for employee training.
Lack of attention to these factors may combine to create a stagnant learning environment, which is not conducive to recruiting or retaining a skilled workforce. As industries advance in technology, automation, cybersecurity, data, and analytics, companies that fail to recruit skilled workers and promote a healthy learning environment to keep pace with advancing technology, will not access their full competitive capabilities and fall behind.
Skills Gap Causes Lack of Innovation
An untrained workforce lacks both the motivation and skills to recognize opportunities for innovation. Advancements in automation and equipment cannot be fully utilized because of the lack of employee knowledge and skill. The workforce is simply trying to keep up rather than applying the insight required for product Innovation. There is an eventual impact on speed-to-market and overall company growth and competitiveness.
Current employees lack the necessary training to understand and operate the technology for their job, while prospective employees are not gaining the skills which are most in-demand before they enter the workforce. It is therefore important for companies to invest in both immediate and pipeline training initiatives, both at an internal level as well as using outside resources to enhance the level of learning and retention.
What are the challenges your company is facing when it comes to filling the skills gap?
Reach out to QC Training Services to learn about the technical and quality training solutions to bridge the gap and promote innovation in your workforce.