As the financial services sector evolves at a breakneck pace, the demand for a diverse set of skills is on the rise. However, a considerable skills gap has emerged as the supply of these skills struggles to keep up. This calls for urgent attention from industry leaders, particularly within Learning and Development (L&D) and HR teams.
Recent data from the Financial Services Skills Commission (FSSC) underscores the urgency of this issue. There is currently a 20% gap between demand and supply for technical skills, with data analytics and insights topping the list as the most sought-after skill. However, the skills gap isn’t just limited to technical expertise. Behavioural skills, such as coaching and relationship management, are also in high demand.
Why not just fire and rehire to get the right skill sets?
According to the FSSC, it costs an average of £31,800 to reskill an employee against nearly £90,000 to make a role redundant and rehire the relevant skillset.
Therefore, based on the research we can estimate that over a four-year period, a company with 8,000 employees could save between £23.75 million and £36.25 million by upskilling current employees to bridge skill gaps.
At the moment, the skills in demand in the financial services sector are evolving at an unprecedented rate. This is resulting in an imbalance between the supply and demand for particular skill sets, with fewer people possessing the skills needed. As a result, competition for talent with in-demand skills is much higher.
For example, as many of 50% of all vacancies in the Financial Services sector are deemed as hard to fill. Therefore, the only way to redress this talent deficit sustainably is to close skill gaps through targeted upskilling and reskilling of existing talent.
How are L&D teams responding to this so far?
To meet these challenges, over 80% FSSC member firms are now forecasting their future skills needs. This proactive approach is enabling firms to identify skills gaps early and strategise effectively.
Despite these efforts however, many L&D and HR teams in the sector are not gaining the best ROI from their current approaches to reskilling. The speed at which future skills are becoming the skills of today is unprecedented. Therefore, speed is of the essence when it comes to reskilling and upskilling.
However, simply speeding up traditional methods of reskilling is not only unsustainable for many already understaffed L&D teams, but doing more of the same on a larger scale serves only to dilute L&D efforts.
What next?
Skills Academies are a great option for Financial Services organisations with ambitious and continuous skills development initiatives for a number of reasons:
1. Relevancy and adaptability: traditional reskilling methods often follow a one-size-fits-all approach, which may not necessarily align with the unique organisational needs. Skills academies are effective at aligning learning with specific business goals and the evolving needs of the business.
Difficulty keeping up with organisational skills needs is one of the top 3 barriers to effectively developing skills. Skills academies are uniquely positioned to overcome this challenge.
2. High learning engagement rates: traditional reskilling methods often rely on passive learning methods, however skills academies prefer active learning methods, which has been proven to improve engagement and learning retention
According to a study by the National Training Laboratories, the average retention rate for traditional lecture-style training is only 5%, compared to 75% for learning by doing.
3. Cost-effectiveness: traditional reskilling methods can be more costly in the long run, as they often expire and require continuous investment in new training programs. However, skills academies provide a scalable approach to reskilling, as they can adapt and evolve with an organisation and its L&D needs.
According to a report by the Association for Talent Development, companies that have implemented skills academies report a 14% lower cost per learning hour compared to companies using traditional reskilling methods.
4. Employee Satisfaction: traditional reskilling methods are often very impersonal in their approach when deployed at scale, however skills academies are able to deliver learning that is personalised from an organisational level all the way down to an individual level, allowing employees to reskill in a way that makes sense for their career ambitions.
According to a Gallup study, employees who believe that their company is invested in their learning and development are 17% more productive.
5. ROI: Based on all the above factors, the cost to impact ratio can deliver higher ROI for L&D teams compared to traditional reskilling methods.
A report by McKinsey found that companies implementing skill academies saw a 10% increase in productivity and a 25% increase in employee retention rates, both of which directly contribute to ROI.
Learn more about skills academies
The beauty of skills academies is that they augment your existing L&D expertise to empower you to upskill your teams in the way that makes sense for you.
Reach out to speak to a member of the team about how Hive Learning can help you and your team unlock tomorrow’s skills, today.
Sources:
Reskilling Everywhere All At Once – FSSC
The skills-based organization: A new operating model for work and the workforce
8 Employee Engagement Statistics You Need to Know in 2023
Learning and skills at work survey 2021
The State of Organizations 2023 – McKinsey & Company
