How to unlock Europe’s digital growth potential

However, it isn’t just the number of job vacancies that employers struggle to fill — it is the type of jobs they find difficult to recruit for that can cause the biggest headache. Many of the shortages are in roles that are core to a company’s digital transformation. For example, the survey found the biggest reported difficulty was in finding employees with skills in cybersecurity.

With headline-grabbing stories about the impact of attacks on companies — and their customers — a focus on the need for such jobs is understandable. Nevertheless, other skills that help with a digital transformation are also in short supply. Employees who are able to analyze the big data that is being unleashed by the world of Industry 4.0 which can help them better understand consumer trends, are also hard to find, as are those with expertise in AI and robotics. In total, more than 40% said it was hard to recruit the right talent to drive a digital transformation.

There is also evidence that the situation is likely to become increasingly challenging in the future, as more and more employers compete to find digitally skilled employees. Of those we surveyed, 10 times as many expect the recruitment challenge to get harder in the future as those who expect things to get easier. The message from employers across Europe is the same: they are struggling to hire the right people with the right range of skills, a situation that is only going to get more difficult in the years ahead. In short, the jobs market simply doesn’t seem to be adapting fast enough to the pace of technological change that is sweeping industry.

So how best to overcome these issues, resolve skills shortages and help companies with their digital transformation? Governments, universities and other education providers all have a role in working together to solve this problem. There needs to be greater investment in upskilling employees for the new world, and in making the labor market better able to adapt to provide the range of skills that will be needed. Most importantly, however, business itself needs to change the way it addresses these issues.

Most businesses are aware of the potential for the digital revolution to disrupt their business. They understand that the huge increase in data available can give them far greater insights into their customers’ behavior — provided it is analyzed rigorously. They see the impact that robotics and machine-learning algorithms can have on their processes and supply chains. And they know that connected consumers have access to more information than ever before to inform their purchasing habits.

In other words, they know they must evolve, rapidly, in a digital age to survive and grow.

Curiously, however, our survey finds that many businesses’ people and digital strategies have not evolved with anything like the speed, nor to anything like the extent, required to take these opportunities. There is a growing disconnect between companies’ digital strategies and the processes they have in place to recruit the right people to achieve them. The potential benefits that digitalization brings instead risks becoming an existential threat to the company’s future.

Although 60% of companies say they have a business plan that includes an element of technology-led transformation, there is a “long tail” of laggards: just under a third say they don’t have such a strategy. In addition, only a minority of companies are currently giving the opportunities and threats posed by digitalization the attention they deserve.

Business also, however, needs to follow the practice of industry leaders and take a longer-term perspective on the issue. Less than half of those we surveyed have a people strategy that looks out over a timeframe of more than three years.

Boards need to rethink how they attract and retain the right employees — starting with how they plan ahead for the future. The good news is that having a better people strategy can address skills scarcity and have a positive impact on a firm’s future. The better news is that those companies that are digitally mature are already showing the way.

Our research shows skills shortages, particularly in the jobs that are vital for a company’s digitalization programs, can hold a company back and have a negative impact on business performance. A properly executed people strategy, as well as a longer-term timeframe, can help businesses meet these concerns. As part of that strategy, the right recruitment, education and training programs are also needed to help businesses meet their objectives.

At the moment, what is stopping them from attracting the right people? The rapid pace of innovation and the adoption of new technologies is currently the biggest barrier: firms appear unsure about what exact skills they will need in the future. Increasingly, however, companies’ reliance on traditional approaches for sourcing digital skills means they are failing to use the right channels to attract the people they need.

Our survey shows that companies appear to recognize that they have a problem with skills shortages. The best companies are already embracing active learning strategies and taking steps to ensure their staff are equipped for their digital transformation. Nearly 90% say they are investing in improving the digital skills of existing and new employees. That is particularly true for digitally mature businesses, the majority of which are also designing specific recruitment strategies for digital skills and partnering with other businesses to help identify, develop and deliver them

In addition, they are re-evaluating their employees’ career development opportunities, upgrading the employee value proposition, including offering more flexible working, and redefining the qualifying criteria to include individuals who lack some required skills or formal qualifications but have the potential to acquire them. Equipping their employees with core digital skills is essential for a company’s digital transformation.

But our survey also shows that is not enough: other, perhaps “softer” skills are also important. These include having an innovative and entrepreneurial mindset, being agile and adaptable, and having the right social skills for the workplace.

Ensuring employees are able to help with your digital transformation is all well and good at a company-specific level. But how do you go about ensuring there are more employees with the right skills to go around the whole economy? How does society not just learn to deal with skills shortages, but actually close the gap between the jobs that companies need and the employees with the most appropriate skills to fill them?

Our survey shows that business cannot solve this problem alone. Society-wide problems need society-wide solutions. So business needs to work with others to effect change, including governments and education institutions. Companies are expecting government policy initiatives to support changes in the labor market and encourage multi-stakeholder partnerships, from developing more apprenticeship programs to promoting participation of women in STEM degrees.