How efficient skills management can help organisations reduce employee turnover

 2021 marked a watershed moment in the history of the workplace, witnessing a global phenomenon dubbed the ‘Great Resignation,’ where millions chose to exit the workforce. By May 2023, the BBC reported that economists believed the wave had subsided, citing data from theBLS’s Job Openings and Labor Turnover Survey that indicated that resignations had slowed, returning to pre-pandemic levels.

However, the fact that people had ceased resigning didn’t imply that they had abandoned all hopes of doing so, as revealed by the findings of PwC’s GlobalWorkforce Hopes and Fears Survey 2023 that was published a month after the BBC report. This survey, conducted among 54,000 individuals across 46 countries, discovered that 26% (or one in four) expressed plans to resign from their jobs in the next 12 months, representing an increase from the 19% reported in 2022.

This state of affairs therefore continues to present employers with an unprecedented talent crisis. Figures from the US Bureau of Labour Statistics show 9.0 million job openings against 5.6 million hires in December 2023, proving that the talent crunch everyone has been talking about since before the pandemic is still around. If left unchecked, it could lead to an 85-million-strong talent shortage by 2030, suggests a global study by management consulting firm Korn Ferry.

It is clear that demands for challenging and meaningful work, career development opportunities, better pay, and work-life integration are driving this sentiment. To achieve any or all of these goals, employees need future-ready skills. They know this well. They’re willing and eager to learn. What’s more, they expect their employers to back their skill development. If they don’t receive the support they want, they’ll look for it elsewhere.

This drastic change in employees’ attitudes towards work sends a clear message to employers: manage the skills of your employees better to increase engagement and help them learn and grow on the job if you don’t want to lose them.

Effective skills management does all this and more. Here’s how:

Effective skills management is the key to reducing employee turnover

Skills management is the process of understanding the skills and competencies an organisation needs to be successful, ascertaining whether employees have the required skills, assigning employees to jobs on the basis of their skills and competencies, and identifying and filling skills gaps if any. Remedial action to plug skills gaps can take the form of learning and development (L&D), upskilling or hiring.

Effective skills management ensures the right person is on the right job, optimises teams, increases employee engagement by helping employees gain an awareness of their strengths and weaknesses, and the value they bring to the organisation. By encouraging skills awareness, skills development, internal mobility, learning and development and career advancement, skills management helps employees be their best selves at work, helping decrease employee turnover. Investing in L&D in particular holds a key benefit for organisations because employees who feel their employers are invested in them and their growth are more likely to stay engaged, productive and not seek other jobs.

From the perspective of employers, these are the main advantages of efficient skills management:

• Builds employee loyalty: Employee loyalty is when employees stay for a long period and perform at a high level because they feel valued by their employer. This reduces employee turnover. Loyalty is directly linked to employee retention. Skills management helps create loyal employees because it offers them opportunities to train, improve their skills, and grow as professionals within the organisation.
• Helps reduce hiring costs: Replacing an employee costs up to two times their annual salary, according to Gallup. The costs can increase exponentially given that 31% of new hires quit within the first six months while 68% might not even last more than three months. A poor employee experience is usually the deal-breaker. A skills-based recruitment and onboarding process can reverse this trend by ensuring new recruits get jobs that match their skills, get training and mentoring that prepares them for their new roles, receive clear job descriptions, and know exactly what is expected of them in terms of goals and outcomes. Money aside, hiring time has gone up by 18% since before the pandemic, making it all the more urgent for HR to use skills management to secure their talent pool and keep hiring low.
• Creates a future-ready workforce: Employees who receive regular skill training are not only more versatile in their roles but can easily adapt to other roles and departments. Companies need not look outside to fill vacant positions. The expertise, knowledge, and experiences they gain during training makes them capable of solving problems, working autonomously, carving their own career paths, and eventually becoming assets to their employers.

Skill development through targeted training is integral to skills management. Only by upskilling and reskilling employees can organisations hope to develop a skilled workforce, create authentic pathways for career growth, and overcome the talent crisis. Employees are eager to learn, so employers need to step up their game. If they need more convincing, here are some recent studies that support the call for organisations to invest in a culture of learning to overcome the Great Resignation.

The American Upskilling Study, by Gallup

• 71% of employees say job training and development increases job satisfaction.
• For 61%, upskilling opportunities are an important reason to stay in a job.  
• 65% say upskilling opportunities provided by the employer are a decisive factor when evaluating a new job.
• 48% would switch to a new job if offered skills training.
• 66% of respondents aged 18-24 rank learning new skills as the third most important factor when considering a new job.  

2022 Great Resignation: The State of Internal Mobility and Employee Retention Report, by Lever

• Upskilling and reskilling opportunities (8%) is the fourth most important factor in making employees stay, after higher salaries (46%), flexibility and paid time off (21%), and internal mobility opportunities (13%).

McKinsey study

• Employees who quit without new jobs in hand cite lack of career development and advancement potential as the third most important reason for doing so.
• It is also the fourth most important reason why employees who previously quit have now returned to work.  

2021 Employee Well-Being Report, by Glint

• Opportunities to learn and grow is the top driver of good work culture.

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2022 TalentLMS and Workable survey

• Nine in 10 US IT workers want more learning and development opportunities from employers.
• 62% say learning and training opportunities would improve their motivation at work.
• 32% want to learn new skills, 28% want to develop existing skills, and 42% want both.
• Limited career progression (41%) is the top reason for quitting while lack of learning and development opportunities (32%) is fourth.
• Skills development (58%) is the second most important factor in selecting a company to work for (after salary and benefits) while opportunities for growth (49%) is fourth. 

Employers are aware of the urgent need to take their learning and development efforts to the next level. According to LinkedIn’s 2022 Workplace Learning Report, 46% of L&D leaders say the skills gap in their organisation is widening, up four points from 2021, while 49% express concern that employees don’t have the right skills to execute business strategy. As a result, upskilling and reskilling employees has become a top focus area of L&D programmes in 2022.

Improve the focus of your L&D programme and increase its chance of success with these three solutions inherent in efficient skills management:

Three skills management solutions made for the Great Resignation

1. Targeted training

Training for the sake of training won’t solve the Great Resignation-induced talent crisis. An effective skills management programme can ensure organisations offer employees targeted training. This means the training provided solves real problems and challenges, does not take a one-size-fits-all approach, and is engaging and easy to consume. Given that the number of skills required for a single job is increasing at an annual rate of 6%, it is vital that employees learn the exact abilities and competencies they need and don’t waste time on skills they might have no use for now or in the future. Targeted training will ensure that employers focus on the skills that are absolutely crucial not only to their employees but to the organisation’s success as well.

2. Internal mobility

Skills management gives organisations awareness and insights of the skills available to them as well as the skills employees are most interested in using. A learning and development programme that is based on these insights can helps facilitate internal mobility. When employees receive training that not only makes them more adept performing their current tasks but also allows them to challenge themselves in other roles, internal mobility helps them fulfil their ambitions and increases their chances of getting promoted and progressing in their careers. With more and more people actively pursuing jobs that give them purpose, it’s no wonder that 20% of the employees surveyed by Lever prioritised internal mobility. The survey also found that 41% of employees are likely to ask for a role change this year and 67% might quit if denied internal mobility. It has been proven that internal mobility impacts retention – the average retention span at a company that excels in internal mobility is 5.4 years while it is 2.9 years at a company that struggles with it. Despite this direct link, internal mobility remains low on most L&D priority lists.

3. Manager training

People quit for various reasons, and a bad boss is one of them. Poor leadership is not only a drain on company finances, it is also a health hazard for the workforce. According to one study, US firms bleed $360 billion a year in lost productivity, high turnover, and stress-related health costs due to bad bosses. Another suggests that it takes people 22 months to get their stress levels to a normal range after working for a bad boss. For a healthy bottom line and workforce, companies must extend their skilling initiatives to managers so that they can adapt to the challenge of leading remote, hybrid, and in-office teams. When organisations are blind to the struggles and shortcomings of their leaders, it has a direct impact on employee engagement and retention. Today’s workplace needs empathetic leaders who are sensitive to the personal and professional difficulties of team members and who are skilled at communicating and collaborating. Organise can ensure this by deploying skills management and its various tools such as the skills matrix and skills gap analysis across the organisation, ensuring that employees across the board – including managers – have the skills needed to do their jobs efficiently.

If you’ve never created a skills matrix before, check out the MuchSkills guide to developing a modern and comprehensive skills and competency matrix. And if you’d like to know more about why your company needs efficient skills management, read our blog here.