February 13, 2025

Advancing Corporate Yields

Pioneering Business Success

24% Skilled, 76% Stagnant: Is Your Company Drowning In the Skills Gap?

24% Skilled, 76% Stagnant: Is Your Company Drowning In the Skills Gap?

ADP Research’s “People at Work 2025” report paints a worrying picture for CHROs worldwide. Only 24% of global workers feel confident they possess the skills needed for career advancement. This is a ticking time bomb for company success. In today’s hyper-competitive landscape, a stagnant workforce is a sinking ship.

It’s not that employees do not crave career progression by developing their skills. The report shows that they do, ranking second only to flexible scheduling as a reason to stay with an employer.

Yet, they feel unsupported in acquiring the necessary skills. A mere 17% strongly agree that their employers invest in their development — that less than 1 in 5 employees. This gap between aspiration and reality is becoming a breeding ground for disengagement, decreased productivity, and, ultimately, attrition.

This gap is especially alarming among “cycle workers” — those performing repetitive tasks. A dismal 9% of men and 7% of women in this category feel their employers are investing in their upskilling.

This is a wake-up call for CHROs to prioritize skills development. Failure to do so risks exacerbating existing inequalities and hindering organizational agility. Besides, there are clear links between skills development to boosting key performance indicators:

  • Retention: Employees who feel their development needs are being met are twice as likely to stay with their companies.
  • Productivity: Workers who believe their employers are investing in their skills are 3.3 times more likely to consider themselves highly productive.
  • Employer branding: Employees who feel supported in their development are nearly six times more likely to recommend their company as a great place to work.

“Our research shows that a skilled workforce is more loyal to their employers — and more productive. Yet only a small fraction of workers are upskilled within two years of being hired,” said Nela Richardson, chief economist, ADP in a press release. “If companies want to benefit from the enormous technological advancement to come, they must start with investing in the skills and career progression of their workers.”

But CHROs need to look at skills development beyond ticking the L&D box. Generic training programs won’t do.

“We found that education is not enough to fill the skills gap,” said Mary Hayes, research director of people and performance at ADP Research. “The world of work is changing at light speed, and organizations need to do their part to close the skills gap.”

The report suggests that embracing a more strategic, data-driven approach to skills development works. It should cover:

  • Identifying skills gaps: Use data analytics to conduct thorough skills gap analyses and pinpoint the specific competencies your company needs now and in the future.
  • Personalizing learning journeys: One-size-fits-all training is obsolete; CHROs need to embrace personalized learning pathways.
  • Investing in on-the-job development: Formal training goes only so far. Consider creating a culture of continuous learning through mentoring, coaching, job rotations and stretch assignments.
  • Measuring and iterating: Track the impact of your L&D initiatives on key metrics (retention, productivity, and employee satisfaction) to adapt to new requirements and market needs.

Bottom line

The ADP Research findings are a stark reminder that investing in employee development isn’t just a ‘nice-to-have’ — it’s a strategic necessity. CHROs who fail to prioritize skills development risk being left behind in the race for talent and innovation.

By embracing a proactive, data-driven approach to L&D, companies can unlock the full potential of their workforce, drive business outcomes, and thrive in the ever-evolving world of work. The message is clear: invest in your people, or prepare to pay the price.

Image credit: iStockphoto/cyano66

link