At a time when rapidly emerging technology like AI and an increasingly competitive global economy are pressuring companies to innovate and adapt like never before, it’s critical for HR teams to focus on holistic skills management. Many companies face an acute skills shortage, which puts them at a severe competitive disadvantage – from hiring and retention to customer satisfaction and overall business performance. This is why robust L&D programs are indispensable as companies become increasingly skills oriented.
However, the mere existence of L&D programs isn’t enough. HR teams can’t just focus on surface-level KPIs like completion rates – they have to prioritize deeper metrics that reveal whether their approach to L&D is driving concrete business outcomes. This means HR teams must leverage data and analytics to determine not only which skills gaps exist at their organization, but also which types of upskilling programs are having the greatest impact on performance. And with only 25% of workers feeling confident in their data skills, HR teams also have to build data literacy among their workforces to improve strategic thinking across the organization.
Companies need a thorough understanding of the skills their employees possess and the skills necessary to remain competitive. HR professionals must partner with company leaders to bridge these gaps, ensure that business functions are equipped for a more skills-based economy, and maximize the value of their human capital.
Why Data-Driven L&D is Vital for Business Growth
Employees have never been under more pressure to improve their skills, particularly when it comes to the blistering pace of technological development and adoption. Consider the impact of AI, which will fundamentally alter professional roles and responsibilities for a huge and growing proportion of the global workforce. Accenture expects that large language models (LLMs) like OpenAI’s GPT-4 and Google’s Bard – just one type of AI-powered technology – will affect 40 percent of all working hours.
While AI will likely cause job displacement, it will also be an engine of greater productivity and creativity for many workers. According to a 2023 survey of almost 54,000 workers around the world, employees were considerably more likely to emphasize the positive aspects of AI – such as increased productivity and new job opportunities – than the negative consequences. There are many other technologies that employees are eager to learn about, such as data science and analytics, which will help them do their jobs more efficiently and determine how the company can improve performance across a wide range of KPIs.
As companies approach 2024, professionals and L&D leaders need to evaluate skills gaps from two perspectives. First, they must prioritize the skills that the business has identified as essential for growth over the short and long term. Second, they should maintain an open dialogue with employees about the areas where upskilling will have the biggest impact. Both of these initiatives should be grounded in data-driven strategic thinking about how companies will manage human capital in 2024 and beyond.
Assessing the State of Data-Driven L&D
Despite the importance of data-focused L&D programs, many HR leaders and employees report that they still lack crucial data and analytical skills. This doesn’t just mean companies are failing to take full advantage of data to improve products and services, provide better customer experiences, and enable informed strategic thinking – it also means HR teams are struggling to align their L&D programs with core business objectives.
Deloitte reports that 95 percent of L&D organizations don’t excel at using data to “align learning with the business” or increase the effectiveness of learning methods. Too many L&D programs rely on superficial forms of accountability such as completion rates. If a significant proportion of employees are using training resources, the thinking goes, these programs are successful.
But an L&D program could have a perfect completion rate and still have little to no impact on business performance. Programs need to prove their value in a tangible way. It’s no surprise that the top three priorities of the most successful chief data officers (CDOs) are all focused around real-world outcomes: improved decision-making, hitting revenue generation targets, and improving the customer experience.
Data literacy is included in the vast majority of data analytics strategies, but too many HR teams are failing to cultivate it among their workforces. From customer service to product development, data has become central to many core functions across industries – but most professionals lack the data collection, analysis, and management skills they need. As comprehensive data-driven strategic thinking becomes increasingly integral to companies’ operations and business plans, this status quo is one of the main obstacles HR professionals need to overcome.
The Future of Data Literacy in L&D
There are plenty of skills gaps for companies to address, but none are more urgent than the gulf between the need for and prevalence of data literacy. Although 93 percent of business leaders believe data literacy is relevant for their industry, less than a quarter of the global workforce is fully confident in their data management skills. CDOs say the two top barriers to their data and analytics initiatives are talent shortages and cultural impediments to accepting change. Considering the overwhelming importance of data literacy for business performance, this is a tremendous missed opportunity.
However, HR teams also have reasons for optimism. PwC reports that 71 percent of employees are “confident they can adapt to new technologies,” while 73 percent are “ready to learn new skills or completely retrain.” Most employees are embracing revolutionary technology like AI, while companies can clearly see the value of L&D in helping them do so. Almost three-quarters of L&D programs were focused on upskilling in 2022, and 79 percent say it’s less expensive to reskill a current employee than to hire a new one.
While L&D is a way to keep pace with the ever-shifting technological and economic landscape, it’s also essential for developing and executing against the company’s growth strategy. HR teams have to partner with other company leaders to identify and close skills gaps, especially in key areas like data literacy. It’s no wonder that 72 percent of L&D leaders say their role has become more strategic.
As we approach 2024, addressing skills shortages in vital areas like data literacy will become a major competitive differentiator for companies across many industries. By prioritizing data-driven strategic thinking at every level of the organization, HR teams and company leaders will drastically improve decision-making and build a solid foundation for future growth.
Gautam Tambay is Co-founder and CEO of Springboard.