It is difficult to predict the capabilities of a company in three, let alone five years. The world of work is never stable, whether it’s due to geopolitical tensions or market volatility.
This raises a question for HR: How can businesses remain resilient and support employees in an ever-changing landscape? As an example, with AI and ongoing digitalisation, the demand for digital analytical skills is increasing. No company can meet the capacity requirements on the open market. This means that firms need to find ways to upskill their employees.
Many employees believe that upskilling happens naturally as they progress in their roles. Proactive training and new learning opportunities are crucial to equipping employees with the skills they need to adapt to their new roles, use new tools such as AI, and respond quickly to client demands. It is not possible to teach a new hire how to use AI by simply exposing them to the job.
A skills-based workforce will help businesses remain resilient in the face of constant disruption. Instead of relying on bottom-up approaches, companies must adopt a deliberate top-down strategy to build capability programs. Leadership is required to ensure that upskilling takes place at the pace and scale necessary to achieve strategic objectives.
Upskilling helps businesses to avoid expensive skills shortages and reduce their reliance on hiring externally. It also strengthens the internal talent. A skilled workforce is essential for companies to remain competitive in an increasingly changing business environment.
It is 7 times cheaper to upskill than hire talent
The financial burden can quickly mount when you factor in recruitment costs, time for onboarding and integration of new employees into the workforce. Upskilling existing employees can eliminate a lot of these costs. This not only reduces costs but also improves the abilities of the current workforce by enhancing their skill sets, increasing morale, and retaining top talents. Upskilling programs are a smart investment, as 60% of workers need to be reskilled by 2030.
Businesses must protect their foundations while anticipating and managing risks proactively. Organisations need to take a flexible approach when planning their workforce, whether it’s to address skills shortages, workforce disruptions, or compliance issues. Upskilling your employees in new technologies, like AI or data analysis, will ensure that the workforce is ready for the future. This reduces the risk of a skills gap down the road.
Businesses must also consider how to unlock the potential of their employees and organisations. It is important to drive AI adoption in conjunction with CHRO leadership, to simplify and streamline processes, eliminate employee toil, and increase productivity.
The labour market will be reshaped by regulations and pressures
We can expect that new regulations, geopolitical tensions, and political pressures will have a significant impact on the labour market. These factors will impact how businesses hire and manage their staff.
The regulatory environment in Europe is becoming more strict, especially when it comes to areas such as sustainability and responsible use of technology. The EU AI Act imposes stricter obligations for higher-risk applications within HR and workforce management. This encourages companies to adopt ethical practices when using AI tools that affect employees. The growing influence of the work councils that represent over 50 million workers across 1,250 active councils will likely give employees greater negotiating power when it comes to workplace policies.
Organisations must make sure that their teams are able to respond quickly to changing regulatory requirements. To stay on top of compliance challenges, it will be necessary to update internal policies and procedures, foster cross-functional cooperation and invest in training. Businesses that do not adapt to initiatives like the Corporate Sustainable Reporting Directive (CSRD), and the Corporate Due Diligence and Sustainability Directive (CSDDDD), risk being left behind.
To upskill employees at scale, companies should seek out partnerships with organisations that are not traditional partners. This includes universities and traditional competitors. In the future, skills like AI won’t be differentiators; they will become table stakes. Traditional competitors have a common interest in finding ways to effectively upskill their employees.
AI can help teams to become more strategic
Cisco reported in 2023 that 84% believed AI will have a significant impact on their business. AI will become a part of everyday life for some employees, who will embrace it to stay ahead of the game and reap the benefits. Others will fear it. Employees should not view AI as a threat to their jobs, but rather as a powerful tool which can increase productivity. AI will have a major impact on the workplace. Companies must lay the groundwork for this.
AI is not a replacement for workers. It can be used to enhance their role, and help them contribute more to the success of an organisation. Employees who are proficient in the use of AI tools will thrive as AI is increasingly integrated into business operations. AI automates routine tasks, such as data entry or customer queries, allowing employees to concentrate on creative problem solving, strategic planning and higher level decision making.
By equipping employees with the skills and knowledge to work alongside AI, businesses can adapt to wider digital transformations. For example, leveraging data analytics to make smarter decisions and changing customer experiences via digital platforms. However, businesses still require a workforce with enhanced soft skills and competencies. Success depends on the ability to collaborate across silos in an organisation, transform insights into actions and motivate and inspire colleagues.
Upskilling is the key to success in the future
AI, changing regulations and employee expectations are shaping the future of work. The traditional recruitment methods no longer work and companies need to rethink their approach to attracting and retaining talent. Businesses that prioritize upskilling will be able stay agile and reduce costs. HR leaders who embrace AI, on the other hand, will lead the next era in work by using technology to enhance, rather than replace, human capabilities.
Adapting to new regulations does not only mean complying with the law, but it also means shaping the future of employment. Every company, in every industry, should have a culture of continual learning. Having a tailored employee proposition that takes into account the needs of different generations is important.
Learning takes place in many different ways. Any upskilling programme should be multi-modal to allow employees to learn at their convenience and on their own terms. Employees who make an effort to improve themselves should be recognized and rewarded. Businesses that create a workforce that is more innovative, resilient and future-ready will also be rewarded with improved productivity.
Ira has over 25 years experience in helping organisations to adapt their operating model for long-term successes by aligning capability, unifying leadership and engaging the workforce.
He provides advice to clients in sectors like banking, consumer products, and healthcare. His guidance ranges from the strategy phase through to workforce transformation. His work spans Europe as well as the Middle East, East Asia and the US.
Sarah Helm
Sarah Helm is a Principal with Kearney. She works closely with clients in order to help them navigate transformational change programmes.
She has over a decade of experience in management consulting and is an expert in organizational design and agile transformations. She also has expertise in culture and change, business development, operational excellence and business development.
Sarah has worked in various industries, including consumer products, health care, financial services, and the Middle East. She has also worked in North America and Asia.
