We are living through a fascinating period in history - a time when tech advancements are announced every day, just like during the industrial revolution and the dot-com era.
Emerging technologies and disruptive forces, such as artificial intelligence, the gig economy, and automation, are quickly transforming how we work.
As many jobs become automated or obsolete because of these advancements, other roles emerge that demand new sets of abilities. However, if neither employees nor employers make an attempt to learn new skills, a skills gap will inevitably emerge. Employers must address the skills gaps in order to continue to grow, regardless of their industry.
In the past, employers have hired new people to fill the skills gap, but finding new employees with the desired work capabilities is becoming more challenging. Many businesses will be in desperate need by the time they even recognize this skills gap. Companies can identify their teams' current strengths, as well as the skills that the companies need to thrive, by proactively addressing the skills gap.
What Is a Skill Gap?
Not to be confused with the issue of skills shortage, which we discussed in an earlier article, a skills gap happens when the current workforce's skill set does not match the skills required to perform daily work activities.
The importance of bridging skill gaps is obvious in the latest McKinsey Global Survey on reskilling, which shows that it's more critical than ever across all industries. The majority of respondents believe that skill development (rather than hiring, contracting, or redeploying staff) is the most effective strategy to bridge those gaps. Since the pandemic began, businesses around the world have upped their efforts to “reskill” or “upskill” staff. The findings also hint to a shift in the most critical abilities to cultivate, which are often social and emotional in nature: empathy, leadership, and adaptability.
69% of respondents say their companies are investing more in skill development now than they were before the outbreak. 78% of executives believe that talent development is critical for long-term success and 43% of industry leaders believe that their organization must address a skills gap immediately in order to be competitive.
McKinsey's article on reskilling workers in the age of automation also states that approximately 70% of companies see a return on their investment in reskilling. Companies frequently realize benefits beyond just the increased profits. Top achievers frequently seek out firms that provide better chances for advancement. Finally, this skill development can have a large impact on the culture of a company.
The Root Causes of Skills Gaps: The Discrepancies Between Sectors & Lack of Experience
A Deloitte report examines the skills gap problem in industries such as manufacturing, estimating that the skills deficit will leave an estimated 2.4 million positions unfilled between 2018 and 2028 with a projected economic impact of $2.5 trillion. Employers are on the frontlines of the struggle against the skills gap. Understanding companies' perspectives on hiring, training, and retraining a skilled workforce is critical.
In an article for the Harvard Business School, “Managing the Future of Work,” Joseph Fuller argues that "business leaders must support an employer-led skills-development system, in which they apply the same rigor and discipline to procuring middle-skills talent as they did to their commodities supply chains in the past."
Cross-sector collaboration is also required to build strong talent pipelines. A recent report from Georgetown University's Center for Education and the Workforce, which focuses on state leadership in establishing career pathways, makes a similar case for collaboration between postsecondary education and workforce sectors.
Employers must first define and communicate the skills they require, as well as establish recruitment, training, and retention strategies. However, many employers are not prepared to do so because it will require changes to the current process. Emphasizing this issue, Fuller insists that employers must "radically rethink their organizations' roles in developing talent."
Which Changes Should Be Implemented to Combat The Skills Gap?
The Brookings Institution and the National Center for the Middle Market recently released a paper illustrating changes to be considered. Internal talent development can be challenging due to a lack of regular, internal training programs, according to the report.
Strategic, forward-thinking recruitment and hiring are major elements of growing a talented workforce, but HR departments are effectively operational, rather than strategic, in 44% of middle-market companies. The authors explain how "lean HR teams" don't have the time or resources to focus on strategic hiring. As a result, many middle-market companies lack a systematic approach to hiring new employees. 59% wait until a specific post needs to be filled instead of using continual outreach attempts.
Skills Gap in the Accounting Department
In “The skills gap in accountancy”, Managing Director of Theta Financial Reporting Chris Biggs argues that there’s a skills gap in experience rather than basic abilities, which are more important to an individual's performance and employability. Many professions have a gap in experience where professionals require more commercial and real-world experience to use their auditing and accounting skills.
While it is impractical to expect all accountants to be skilled in every field, the training environment encourages trainees to work in a specialized area of a company, giving them extensive knowledge and skills in one area, but little exposure to other areas. Therefore, it is important to remember that investing in employees’ skills is also an investment in the business, as long as the company can retain the talent it develops. This is another step that businesses must make to be competitive.
Both employees and employers have the capacity to close this accounting skills gap. There is much talent available to be hired but skills must be developed in those individuals in order to keep the best talent available today.
Hard vs. Soft Skills in the Accounting
Accounting pros are often thought of as simple “number crunchers”, but they're actually responsible for much more, which makes them exceedingly tough to hire.
It's a common misperception that accountants just create monthly reports. However, their role can include much more, including taxes, financial planning, analysis, forecasts, and internal controls. There is pressure to be trusted advisors to the company's leaders. Accountants can be the most qualified to advise an organization on whether or not to pursue a particular strategic approach.
While hard skills are obviously needed in accounting positions, soft skills have received much attention. In 2020, soft talents such as creativity, communication, negotiation, and leadership have become highly desired. Employers are looking for employees who can do what their new AI tools cannot.
According to a 2019 Sage poll, the top three skills required in the coming years are technological literacy (57%), relationship building (46%), and business advisory (44%). All of these areas are led by humans, and while automation can help, it cannot take their place.
With the rise of automation, skills such as problem-solving and critical thinking will become even more important, because technology is never flawless. The capacity to think fast and respond to a situation in real-time is critical for any organization, and employers will place a greater emphasis on this skill in the next year.
"An ability to be empathic and helpful, a capacity to think beyond the data to give the strategic counsel services consumers will want, and a growth mindset — in this case, one that means people understand automation and how to harness it – will be critical“, says James Poyser, CEO of Provestor and inniAccounts.
Soft Skills are Taking The Place of Analytical Skills
In a report ‘Understanding Technology Attitudes within UK Finance Professionals’ by CaseWare, 1000 industry insiders provided their thoughts on trends and problems they're dealing with in their work.
These accountants foresee a shift away from analytical and data entry abilities (which are now very important) toward a more expansive set of skills, including the ability to use accounting-specific software, according to the research.
More than half of the polled accountants (56%) believe that many of their present responsibilities may be automated, with 43% expecting this trend to continue beyond 2020. Furthermore, analytical skills are viewed as one of the most crucial by 41% of accountants, with 37% believing that they will be necessary for the next five years. The same can be observed about the ability to accurately record data; 41% feel it will be a critical skill in the next five years, compared to 61% who believe it is required now.
On top of that, a third of accountants believe financial reporting will be an essential skill by 2024, compared to only 25% who believe it is a crucial skill now. In comparison to just 24% today, 30% felt that accounting-specific software will be a crucial tool in the coming years to help with compliance with reporting rules and Making Tax Digital.
Both employers and employees have a long way to go when it comes to bridging the skills gap within the accounting department. More employers are realizing the importance of soft skills, which automation and robots cannot achieve (but are still important for accountants). It won’t be possible to develop those soft skills immediately.
Employers should work with colleges and universities to create an atmosphere of learning and improving the soft skills of their employees. But for new hires, there has historically been no easy way to tell if a candidate possesses the hard or skills necessary for the job.
As we also mention in “Accounting Skills Gap No Longer an Unlikely Possibility,“ relying solely on resumes is no longer an option. In most cases, resumes exaggerate candidates' good past experiences while omitting all unfavorable details. As a result, for accountant applicant screening and hiring, organizations cannot rely on traditional hiring tools alone.
An effective and talented accounting team is crucial to the success of every business, so neither soft nor hard skills should be dismissed. These skills may include accounting industry knowledge, technical skills, and analytical reasoning skills, which will ensure a more thorough understanding of the candidates' capabilities.