Beyond Skills: Capabilities could bridge the skills gap for UK business

Why the time to tackle the capability gap is now    

Avado, the professional academy, has today (27 Apr) unveiled research identifying a dramatically widening gap between business needs and people capabilities over the course of 2020. 

Businesses that had previously invested in employee development, however, were somewhat protected from the worst effects of the pandemic: of those surveyed, 71% that saw growth over the last year had increased their training budget and invested in employee development during 2020, showing commitment to sustainable growth.

Among businesses that saw a decline, 61% said they did not have a training strategy or that their strategy was not fit for purpose. 

The research “Beyond Skills” surveyed over 1,000 executive leaders and senior HR staff from progressive UK and Asia Pacific (APAC) organisations.

The research was further analysed by ambassador Miatta Fahnbulleh, Chief Executive of the New Economics Foundation.

More than three-fifths of business leaders revealed that the events of 2020 had widened the skills gap to a capability chasm in 2020, with the majority feeling they had been unable to manage the issue. 

Over-reliance on traditional skill sets and recruiting to plug capability gaps at the expense of staff development were also shown to have negatively impacted business growth. 

• In the UK, nearly half of executive leaders and two-fifths of HR leaders admitted to using recruitment of new talent to fill capability gaps.
• Respondents across all industries agreed their organisation had prioritised survival over capabilities (63%). This was particularly pronounced amongst HR respondents (69%).
• Concerns about mental health were global: 49% of UK respondents and 48% in APAC were concerned about the future mental health impact of the capabilities gap.
• In general, respondents in the UK were more concerned about the gap than in APAC. 

Mark Creighton, CEO of Avado, said,

“There is a definite opportunity for employers to invest more in their people to diversify the workforce and move the conversation beyond skills. The businesses that remain competitive in our recovering economy will be those that embrace a strategic approach to the development of capabilities, not just answer the challenge through recruitment. We must take urgent action to implement training strategies fit for the future that give existing employees, not just new recruits, the opportunity to contribute to business success.”

In 2020, the rapid transition to digital exposed and exacerbated the imbalance between capabilities organisations need, and capabilities employees possess, causing friction across all sectors surveyed.

More than two-thirds of senior HR (69%) and half of executive leaders (57%) surveyed agreed that their organisation had prioritised survival over capabilities. 

“Investment in capabilities matters more than ever to business growth and long-term productivity,” said Miatta Fahnbulleh, Chief Executive of the New Economics Foundation and ambassador for this research.

“To succeed in a future of profound change, we need to think well beyond skills. In fact, we will need a capabilities revolution.” 

Even in areas where concerns around the future were lowest, such as government and public services, more than half of respondents expressed worries about the impact of the capability chasm on mental health, redundancies, and the overall health of our economy.

Tellingly, over half of all respondents had looked at training outside of their current role, taking matters into their own hands. The evidence is clear: the importance of capabilities across all industries for profitability, staff retention, and future competitiveness should not be underestimated. 

To be profitable long-term, businesses need to take stock of their priorities and their capabilities, moving urgently to put a strategy in place fit for the future.