Building A Skills-first Culture: Challenges for Leadership

At LHH, we’ve been fascinated by the results our annual Global Workforce of the Future research based on a survey of 30,000 workers across 23 countries. We decided to explore what other people are saying about some of the key points raised by our data so we could provide more context for our research. Our survey found that workers want their managers and leaders to take a more active role in guiding their development so they are ready for the workplace of tomorrow, so we’ve chose to explore what that’s likely to mean in practice – and why it’s important.

The emergence of skills as a major workforce issue is not a huge surprise by itself: Last year’s edition of this research, Unravelling the Talent Conundrum, found that only 36% of non-managers felt that their employer was investing effectively in developing their skills. What’s brought this issue to the fore is the startling pace of change, with the United States seeing over 305,000 layoffs across 2023 – a number that looks set to be exceeded in 2024 – and the sudden emergence of generative AI that has the power to massively broaden the scope of automation across sectors.

Given this context, it’s not surprising that twice as many respondents to this year’s Global Workforce of the Future survey want to be upskilled or reskilled with their current employer than want to switch employers with their current skill sets. And, given the difficulties in recruiting ready-made talent with in-demand skills, employers would be well-advised to listen to what their people are saying. In most circumstances, developing in-house talent will be more cost effective than competing to recruit the skills you need – and that’s before we even consider other potential benefits such as increased engagement and loyalty.

Investing in the future

Instead of making the most of this opportunity to develop in-house talent, organizations are reducing their focus on learning and development (L&D). Training Magazine’s annual Training Industry Report found that the average number of hours of training per employee fell from 62 in 2022 to 57 in 2023, and that spending on training seems to be falling on a per-learner basis (however, Training Magazine’s research does not shed light on the reasons for the fall in spending).

While it’s disappointing to see that employers seem to be responding to the prevailing economic uncertainty by reducing L&D opportunities, we’re more interested in what this tells us about organizations’ posture in relation to skills. Simply, too many employers still treat L&D as no more than a cost to be cut when belts need tightening, when it can in fact help against the conditions that made cost-cutting necessary.

At a time when employers are facing difficulties in recruiting the skills they need, retaining the talent they want to keep, and maintaining employee engagement – especially among younger cohorts – we hoped for broader recognition of the ways in which a skills-first approach can help ameliorate these issues. We’re unsurprised, however, that our hopes are not yet being fulfilled; for many organizations, this change of posture can only come from a broader shift that puts L&D at the heart of the organizational culture. Ultimately, this is a change that can only succeed with high-level buy-in, which means that leaders must reassess their views of L&D and its role in their organization.

In turn, this means that leaders must set a positive example (and, crucially, be seen to do so) so that a skills-first culture can take root. Fortunately, it seems that individual leaders do in fact recognize the importance of a skills-first posture and their role in achieving it. Last year, 78% of the C-suite executives in our Bridging the Leadership Development Gap research agreed that leadership development is becoming increasingly important to monitoring and maintaining employee engagement. Similarly large majorities stressed the importance of leadership development to recruitment and retention (79%), reskilling (76%), and developing empathy and compassion (77%).

Insights from the leaders of tomorrow

We should take a moment to consider the expectations of the next generation of talent. Gallup’s aforementioned research identified the perceived lack of development opportunities as a driver of disengagement among younger workers, an assertion that is backed up by research from LHH’s parent company, the Adecco Group. Each year, the Adecco Group surveys past and present participants in its CEO for One Month program – a group that naturally contains a high proportion of the leaders of tomorrow. Over the four years in which this survey has been conducted, the proportion saying that soft skills (such as the empathy and compassion that C-suite identified in Bridging the Development Gap) will be more important for future CEOs than hard skills has risen from 69% to 81%.

While the exact mix of hard skills needed within any given team or organization can be expected to change rapidly and unpredictably over the coming years – after all, few foresaw how quickly AI skills would become essential – one prediction we can make confidently is that leaders with the requisite soft skills to manage such change will be in high demand. The organizations that emerge most successfully from this change will be those that actively equip their leaders with the ability to guide their people through a fast-shifting skills landscape.

This all presents a picture that, on the face of it, appears contradictory. The importance of leadership development is acknowledged by both the leaders of today and of the future, as is the need to enhance soft skills across the C-suite. So why, then, are organizations cutting back on training?

Of course, the specific pressures within and on any given organization will be unique, so any answer to this question will be a broad-brush one. That said, we believe that the cuts identified by Training Magazine are, in most cases, a short-term solution to short-term financial concerns. This is understandable, but we urge any employers taking this approach to watch their competition closely.

If you are cutting training while your competitors are bedding in a skills-first culture, the impact may not be apparent this year or next. But, over the medium and long term, we will see widening divergence. Who will the strongest talents and future leaders of the next generation choose to work for: The employer with a diminished, cut-back development offering, or the one that can teach them to develop whichever skills emerge as vital in the future so they can continue to contribute to the organization’s ongoing success? The organization that gives them the tools to craft their own career path, or the one that wants them for one job only? The research suggests this will not be a close contest.

The strongest talents and leaders of the future will not be assuaged by promises of programs to be implemented in the future. They want to see – now – that their prospective employer’s leaders will take their development seriously and treat it with sensitivity, which for many organizations represents a momentous change.

LHH’s view

Look again at the picture we presented at the start of this article: Workers want their leaders to take a more active role in their development and do not feel that their employer is investing in their development effectively. It’s not surprising, then, that this year’s survey found fewer than 1 in 10 workers who are looking for a new job are seeking a new role with their current employer. More anecdotally, most of us can cite at least one example from our careers of an employer that treated the departure of a high-flying team member as a sort of betrayal, rather than a natural consequence of failing to meet that person’s need for personal and professional growth.

When we talk about the cultural shift that’s needed to meet the expectations of the next generation of workers and leaders, this is what we mean. A team member leaving for a desirable opportunity should be a cause for celebration, not recrimination, as it means they have been well developed and well managed. Rather than lamenting the loss of key talent to new opportunities, leaders must strive to ensure those opportunities can be accessed within the organization – which, of course, means equipping your people with the skills they need to grasp those opportunities.

Achieving this means creating a culture in which every worker, every leader, and every manager is to some extent an L&D manager; where new entrants can see those in the C-suite preparing themselves for the challenges to come and are empowered to follow suit. In short, a skills-first culture must start with leadership development.

We understand that developing a skills-first culture is, for many organizations, a large undertaking – but it is a vital one. Business discourse has been dominated by digital transformation for the best part of a decade; at LHH, we believe that this focus on the technology driving the digital transformation agenda will, in the coming years, give way to a new focus on the skills required to make the most of the investments already made (as well as those to come). In taking this view, we do not stand alone: We’re in agreement with the 78% of C-suite executives who told us last year that they see leadership development as increasingly crucial to their business’ very survival.

To discover more insights from our Global Workforce of the Future research, click here.

For more information on how LHH can help your organization develop a skills-first culture, get in touch.