The Looming Skills Shortage
Simon Wagnitz
Director @ Kainos | Software Engineering | AI | Low-Code | Cloud | Sociology Geek
The Looming Skills Shortage: Part 1 in the AI for HR Series
Common case of underpreparedness
In?the corridors of a medium-sized manufacturing firm, a critical role has been left vacant. Peter, a highly skilled electrical engineer and “boomer,” recently retired after three decades of service. His departure has left the company scrambling to fill the gap to improve or at least maintain the code of the assembly line. Despite the knowledge of the upcoming gap, the firm failed to adress this skills shortage and did not prepare adequately for John’s retirement. This didn't happen because of negligence. There were simply too many similar cases at the same time across the firm. The consequences have been severe: project delays, increased operational costs, and a noticeable dip in product quality. This scenario is not unique but rather a microcosm of a broader issue facing businesses today.
Boomers?Retiring
Across Europe, companies are grappling with the impending retirement of the baby boomer generation. This demographic shift is creating a significant skills gap, as the number of retirees outpaces the influx of new graduates entering the labor market. In the EU, according to Eurostat, the population of those aged 65 and over is projected to increase from 90.5 million in 2019 to 129.8 million by 2050. In Germany, according to Destatis, the largest baby boomer cohort, born in 1964, will reach 60 years of age in 2024, marking the peak of this demographic wave. The UK faces similar challenges, with a significant portion of its workforce approaching retirement age.
The challenges are multifaceted. Not only is there a shortage of experienced workers, but the institutional knowledge they carry is also at risk of being lost. Companies are finding it increasingly difficult to maintain productivity and innovation levels. The old-age dependency ratio, which measures the number of people aged 65 and over relative to those of working age, is expected to rise significantly. According to Eurostat, in 2019, this ratio was 37.6% in Greece, 38.4% in Finland, and 38.6% in Italy. By 2050, those aged 55 years or more are projected to account for 40.6% of the EU population. This demographic shift will likely lead to increased pressure on social security systems and a greater demand for healthcare and long-term care services.
Are HR Platforms the Solution?
There is a silver lining. Companies that invest in advanced HR platforms like Workday, are better positioned to manage these transitions. By leveraging AI, these platforms can capture and analyze worker details and skills, predict retirement ages, and develop proactive replacement strategies. For instance, Workday’s skills cloud uses machine learning to identify and catalog employee skills, making it easier to match internal talent with open roles.
However, ERP tools are only as good as the data they have access to and the maintenance that ensures their quality. One of the primary reasons skills shortages remain invisible and unaddressed is the existence of data silos. Employee data might reside in Workday, while critical operational knowledge, such as machine operation instructions and associated skills, are stored in SharePoint, Drives or even in paper files. This fragmentation prevents a holistic view of the workforce, its capabilities, gaps and transition plans.
领英推荐
As data and AI experts, Kainos recommends a comprehensive data platform that can ingest information from various sources, breaking down these silos. By integrating data from HR systems, operating procedures, and other repositories, this platform can provide a unified view of skills across the organization. Enhanced with AI, the platform can profile and report on skills gaps, making them visible and actionable. For example, AI-driven analytics can identify employees with potential to be trained for critical roles, ensuring a proactive approach to workforce planning.
By using AI to analyze workforce data, companies can develop targeted training programs and succession plans, ensuring a smoother transition and continuity in operations. Additionally, predictive analytics can help HR departments anticipate future skills needs and adjust their hiring and training strategies accordingly.
Preparing now
Reflecting back on?the initial case of the manufacturing firm, it’s clear that the implementation of AI and data platforms could have mitigated the impact of Peter's retirement. By preparing in advance, the company could have identified the skills gap and trained or hired and upskilled a successor, avoiding the operational disruptions they now face. While the challenge of skills shortages is daunting, it is not insurmountable. With strategic investments in technology and a forward-thinking approach, businesses can navigate this transition successfully. The time to act is now, ensuring a resilient and prepared workforce for the future.
I am attending Workday Rising EMEA in Amsterdam, the Netherlands, 10–12 December 2024 and would love to discuss the use of AI in HR with you.?
Disclaimer: I used Copilot to create the article. The thoughts expressed, research, argument and examples are my own. Copilot helped me with style, conciseness and increased the speed in which I was able to generate the article.
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What if we just created a way to keep access to their expertise? Turn all skilled leavers into the companies own Private Expert Network and use them for MicroConsulting. Small bite sized bits of expertise. Trouble -shooting, training, mentoring, advice and so on? Unless their dead, the knowledge, skills and relationships are still out there. Sure you may have to pay for shorter bites of their time. but if you make it worthwhile you've got a safety net.