This session provided a preview of an upcoming PwC paper Where next for skills? How business-led upskilling can reboot Australia - about why a business-led upskilling effort can drive productivity, innovation and growth, while also helping Australia to recover from the economic impacts of the pandemic.
This is an edited transcript of a discussion involving Peter Wheeler, People & Organisation Consulting Partner, Tim Rawlings, Director, PwC Skills for Australia and Lisa Main, Social Impact & New World, New Skills.
Three questions that boards should be asking their CEOs and executive teams.
Do you have a clear view on required digital, and not just technical, but enterprise skills needed to ensure that investment in AI and automation will deliver growth?
Is your organisation clear about the risks of not upskilling?
And does your organisation have a map of where the skill competencies lie? And that's different from job titles?
Since the crisis began, Australia has seen more than a million new people looking for work. And with travel bans in place, the government is expecting about an 85% decrease in net migration this financial year, which is not good news for organisations that rely on migration channels to fill skills gaps.
The other context is the immediate shift to remote working. In May, we surveyed CFOs around the world and found that roughly half planned to make remote work a permanent option and 50% said they plan to accelerate automation and digital ways of working as employees return to work. We're confident that digital acceleration and digitalisation of business will characterise the post COVID-19 environment. This will have broader implications for society. It will further exacerbate the digital divide, making it harder for individuals to overcome barriers of access, affordability and importantly, digital ability. Workers who have the opportunity to upskill and improve their digital acumen on the job will have a significant advantage over those who do not.
The impact of automation will also most likely fall heavily on those who can least afford it. First Nations Australians experience disproportionate impacts compared with Australia’s non-indigenous populations. There's an opportunity for businesses to work with the government on mitigation strategies for roles that are at risk of automation as we pull out of the pandemic.
In our report we have included views of the workers. On the eve of the pandemic, which we never expected to be of this scale, we asked workers if their employer had provided them with skills training in the last 12 months. 72% said no. When asked if their employer was providing them with upskilling in areas relevant to their roles, only 28% said yes.
Meanwhile in January this year, we heard that 78% of CEOs in Australia said that the availability of key skills was a top threat to growth, a figure that has continued to grow each year.
So before the pandemic, Australia already had a skills problem. That problem is now more complex because of the remote and distributed nature of the workforce and more urgent given the economic impacts of the pandemic.
The COVID-19 pandemic has magnified the need for new skills - upskilling is more complex and urgent. A defining feature of the past decade has been the rise of digital technologies and digital transformation of all businesses. This has been focused on productivity, growth and customer experience.
This is transforming the way that jobs are carried out in a number of ways. One in five of Australian jobs is likely to be disrupted by technology. From a worker's perspective, 60% of Australian adults are worried automation is putting jobs at risk while 59% believe technology will change their job in the next three to five years. Technology is replacing workers in routine tasks that are easy to automate and complementing workers in tasks that require creativity, problem-solving and cognitive skills. As machine learning and AI advance, workers in many sectors will need to transition into new roles and develop new capabilities characterised by high level, non-routine skills.
In response to COVID-19, many organisations have moved quickly to continue business and that has a rapid continued pivot to digital. This was driven by social distancing obligations and the shutdown of certain activities unleashing a number of self-reinforcing forces. For example, consumers are purchasing more online. Secondly, businesses are flexing their delivery service model to remote delivery, i.e. principally through digital channels. The ABS reports that in March, 38% of businesses changed the method of delivery for goods and services, including via online. We've seen that across the board with: government moving services like court matter hearings remotely, remote supervision of people subject to community-based orders and expanded telehealth options; banks dealing with hardship using digital means to connect; telcos moving contact centers onshore and using text-based ways to connect with customers; and restaurants moving to online ordering of home delivered meals.
Remote working is increasingly becoming the new normal. In May, our global COVID-19 CFO pulse, which includes Australia, found that 50% of CFOs plan to make remote work a permanent option. And 78% believe the work flexibility they have created in response to the crisis will benefit their organisations in the long run. Almost 50% of CFOs said they intend to accelerate automation and new ways of working post COVID-19. A more recent survey showed only 15% of CFOs are worried about productivity and the ability to support remote working.
Adding to this, as a result of the lockdown, Australia faces years of higher unemployment. PwC’s Chief Economist, Jeremy Thorpe said that since the crisis began, Australia has seen more than a million new people looking for work. Those unemployed are most likely to be at the extremes of their working lives - either younger or older workers, but all employees are becoming more anxious around how their roles might be displaced.
Post COVID-19, digital acceleration will further exacerbate the digital divide impacting every industry. Workers who have the opportunity to upskill and improve their digital literacy on the job will have a significant advantage over those who do not. For those already affected by the digital divide, the government will need new policies to overcome barriers of access, affordability, digital acumen and ability.
Migration is expected to be 85% lower in the coming year so Australian businesses can't rely on skilled migration to fill local skills gaps. Re-skilling more than ever will be a critical element of creating jobs post COVID-19. The post COVID-19 world will be characterised by accelerated digitisation, automation and the rise of AI. It's important to recognise we can't necessarily protect jobs. But organisations can protect people by preparing them to be future fit for roles within and outside of their organisations.
Upskilling is too important to leave to HR and the L&D teams alone. It needs to be led from the front by the CEOs as the world emerges from COVID-19.
PwC’s global CEO survey highlighted that 78% of Australian CEO’s believed that the availability of key skills is a top three threat to growth. The majority of CEOs agree that significant retraining or upskilling was the most important way to close that potential skills gap in their organisations. However, only 18% have made significant progress towards establishing an upskilling program. Only 15% of Australian CEOs say their upskilling programs have been effective at achieving greater innovation and accelerated a digital transformation (compared to 31% globally). From a worker's perspective, only 23% of Australians say that upskilling is happening within their workplace (second least likely behind in the UK). But, there is readiness among Australians to learn with 69% of adults prepared to learn new skills or completely retrain in order to improve their future employability. This figure jumped to nearly 80% amongst 18 to 34-year-olds.
We believe that business needs to do more to lead digital upskilling. And there's a number of things that we think businesses can do.
1. See skills as a priority investment, not an expense
Upskilling needs to be the responsibility of CEOs. Too many transformation initiatives fail due to a lack of leadership, including an absence of role modelling, ownership and commitment. HR leaders should continue to be the stewards of the workforce, but if talent development remains a strictly HR function without the visibility, drive and leadership of the CEO and executive teams, it has the risk of becoming business as usual and not a strategic priority.
To successfully upskill employees across all roles, organisations can’t simply create a tactical learning program. They need to create a movement and enable a cultural shift within the organisation around upskilling. This must be led from the top with visible commitment and ownership from the CEO and leadership teams. From a PwC perspective, our global chairman Bob Moritz committed $3billion to upskill PwC people and we're rolling that out across all 260,000 of our people globally. That tone from the top has really set the mandate within our organisation.
2. Determine the skills required to thrive in an accelerated digital environment.
It's important to cast the net quite wide when defining the critical areas for upskilling investment. This includes the big technical skills of the future, such as AI, automation, robotics, data analytics, data visualisation and digital security. Importantly, it also includes enterprise (or soft) skills that employees need in any role to collaborate, troubleshoot, lead and resolve work-related problems in the digital environment. It also includes investment in creativity, innovation, imagination, collaboration, and design skills as critical business enablers.
31% of Australian CEOs say they're making progress in identifying technical upskill and re-skilling needs. But only 13% of Australian CEOs said they have made significant progress in establishing an upskilling program that develops a mix of soft, technical and digital skills.
When embarking on an upskilling initiative many organisations discover they don't actually have sufficient understanding of the current competency profile. That's not as simple as just looking at organisation charts and role descriptions which are often not detailed enough to make a meaningful connection to the broader organisational strategy. Organisations need to assess and understand what skills will be needed. This must be agnostic of the skills you currently have and focus on what is needed to support and drive the business strategy over the next 12 months through to the next four or five years.
It's also important to identify key processes in areas where automation will significantly reduce cost, increase business performance and maximise return on investment. Then, assess which specific roles, teams and employees require targeted upskilling so that they can use the new tools or perform their job based tasks. Finally, to build effective adoption and buy in, look at what enabling skill sets are required across all employee groups in order to create a culture of digital innovation, curiosity and effective leadership.
At PwC, we’ve rolled out a Digital Fitness App which establishes a baseline of employees’ individual digital fitness, and drives an ongoing learning mindset in users by curating and tailoring updated, bite-sized learning, based on their skill gaps and needs. More importantly, it has started a movement around curiosity of what is digital awareness and what are the key trends in digital.
3. Rethinking and digitising traditional learning pathways.
Organisations need to think very differently about and design a different way of learning. The skills organisations need today and in the future, like creativity, problem-solving and understanding how digital technology can be used are a moving target. The post COVID-19 world will continue to be characterised by rapid technological change, so we need to create learning pathways that enable workers to learn and apply these skills quickly. Many corporate learning and training efforts fall short, stopping at just delivering knowledge, providing new information about digital trends and tools, but no real opportunity to use them. In a digital world, building digital proficiency must move from the classroom and become a key component of an employee's day-to-day work through action-based real-time learning. The more directly applicable and used the learning is to a person’s work, the more meaningful that experience will be.
It's also important for workers to build a diverse skill set, including developing skills outside of their current role description. When thinking about the future of work, the only certainty is that it will look very different from today. Workers need to prepare for the changing nature of roles in the workplace so be a bit more curious rather than just focused on their current roles.
Organisations, particularly of sufficient scale, should set up their own credentialisation system using micro-credentials and badges. This gives learners a clearer understanding of their learning journey and different pathways available to them. Workers are able to choose their own adventure and upskill in areas they are inspired by. That ownership and flexibility in learning is more likely to foster a greater degree of learning curiosity and prepare workers for the ongoing need to upskill or re-skill. It also enables recognition for achievement and provides transferability of skills in the future.
4. Unleashing citizen led innovation
If the people within an organisation take control and start a movement, you are more to see a bigger change. A citizen-led approach is more ambitious than workers acquiring new skills or knowledge; it’s about creating a shared movement that everyone is a part of.
In taking our own citizen led innovation approach, started by talking about up-knowledge, upskilling and up-performing. Up-knowledge is around starting a movement, creating curiosity, providing people and leaders with background information on digital trends and skills they'll need in the future. upskilling involved providing digital academies and creating change agents throughout the organisation. But where the real citizen led innovation comes in is around up-perform, where people are free to innovate, build, share and test solutions. Sharing ideas gets other people invested and builds momentum and change through the organisation rapidly. To bring that to life, we have over 5000 assets in our global digital lab - a collaboration platform for crowdsourcing and sharing solutions that our people have built such as bots and automated workflows.The key is that nothing is mandated, it’s not required of our people. It’s about giving people the resources and the parameters to shake it up within their organisation. And that effectively gains momentum and turns everyone into change agents.
5. Embedding upskilling as a comprehensive part of the employee experience
Organisations that invest in their people develop stronger cultures and are more confident of their future success. 41% of CEOs surveyed by PwC said their upskilling program has been very effective in creating stronger corporate culture and engaging employees. The survey also revealed that organisations that are more advanced in their upskilling journey registered higher levels of confidence for revenue growth.
To attract and retain this talent, an organisation’s stated purpose must be more than lip service - a strong commitment to its workforce and upskilling can really reinforce this and employees need this now more than ever. As does the Australian economy.
Retraining for jobs is a critical issue that will require partnership between business and government. More than four in 10 say they trust business the most to solve this problem, but it can’t solve it without the help of government.
If you think about the system of skilling that we have in Australia, we all went to school and many go on to some form of post schooling education. The system is extremely good at getting people their first job, helping them to enter the economy but not so strong after that. Research by AlphaBeta indicates that by the age of 21, the average person will do 80% of their institutional learning.
But people continue learning and developing throughout their careers, they do it every day, but they just don’t see that as learning. They're not seeing the skills they are gaining such as teamwork, collaboration, leadership skills even some manual and technical skills as being transferable to their next job. One of the things that we're looking at is how the government can not only improve its side of the system but how do we do a better job of iteratively upskilling people and recognising those skills in a way that means that their next employer and the one after that knows what they achieved along the journey.
There’s an opportunity for the federal and state governments to set up an architecture around micro-credentialing. That is the iterative upskilling or just-in-time training that we get within our businesses is recognised so that a person can develop a passport of skills they can take from one job to the next, and show a real pathway for the development of their career. It’s also an opportunity for businesses to improve the way that they upskill. Organisational learning and development and training days might be useful to an extent, but they lack the rigor of a national system. The national system, by its nature, is legislated, regulated and has a quality about it that simply isn't replicated at the moment in the private sector. However, it lacks the ability to be nimble and to provide training just in time and just enough.
For years, routine jobs have been exiting the economy, and every time there’s a recession, that increases. We keep these jobs in the economy in good economic times because no one likes making people redundant, but when bad economic times hit, they’re the first to go and they don't come back. Where the system has failed, is in upskilling people who are mid flight in their career into the jobs of the future. We’re good at articulating the skills required in the future such as data, digital and cyber, we know the end goal but haven’t worked out how to take a person from a to b. In part, that's because the training that we received during our careers is designed to either fill gaps in our skill sets required for our current role, or to fulfill regulatory or legislative requirements. Very rarely do businesses look forward and upskill people to inoculate them against technology or automation changes that might be happening, even if those change’s are core to the business's strategy.
It's incumbent on both government and business to address this challenge, to come up with a more nimble national system. Business has a role to let people upskill throughout their career and retrain them in the skills they will need in the future. And the government needs to step up and create an architecture and an environment that enables business to really lead into upskilling.
There are about seven million people in Australia who work with small and medium enterprises. Many would not have an L&D function or be in a position to release big swaths of employees for upskilling. The Government has a role to play here as well. The recent $2.5billion announcement for the JobTrainer package contained $1 billion to help people upskill, whether they be short courses or full courses into industries that are still growing in the Australian economy. As mentioned earlier, we can’t rely on skilled migration anymore so we need to build a bridge between those people who would be impacted negatively and those opportunities that exist. And at the moment, the current federal skilling system doesn't necessarily do that. And in order to build that bridge, business and government are both going to have to pitch in.
We know that automation is going to cause disruption in the job market. Business needs to think in a different way to the way it has traditionally, by promoting skills up the agenda, but also thinking in a more forward-looking fashion. And the government needs to step outside its traditional remit of giving people a base level of skills and think about a more nimble, iterative upskilling model so that people can keep dipping into upskilling over the course of their lives.
Everyone needs a level of digital literacy, but becoming more curious around the next level of knowledge of technology. More and more we're seeing digital and business connect, in terms of becoming one and the same thing. A key piece for boards is understanding the trends, opportunities and threats. The other piece for boards is role modelling, just as we discussed for CEOs. Showing an understanding and adoption of technology is important. We suggest you should absolutely call on deep subject matter expertise where you have that on your board, but digital skills is something we all need to have in our roles.
We've talked a lot around business and government working together, but the third piece is combining with the education sector and universities in particular. We think it's more critical than ever. Universities provide a lot of that rigor that we talked about. Universities will continue to evolve around encouraging the business community and industries to identify future skills. There are also opportunities for micro credentials and an ability to deliver just-in-time iterative learning.
The key thing that the education sector brings is that no matter how good a business's L&D function might be, universities have centuries of a qualification system that provides rigour, transferability and recognition. There are words that a business can't use like Certificate or Qualification in legislation. Universities also bring a general and pedagogical approach to learning. In business, unless you are a learning business, it is unlikely that you will have the sort of rigor in your training that will be required to actually get skill out of one person's head and into another person's head. That's where we think universities and registered training organisations can be a lot more nimble.There's been a history of putting the shingle out saying this is what we offer and how we offer it, in terms of a long form qualification. But students are voting with their feet. They want things that are more nimble. They don't want to take large chunks of time out during their career. And universities and RTOs are starting to respond to that.
There are two big trends that have been exacerbated by COVID-19. One was, as we mentioned before, that routine workers were exiting the economy. The other is the move away from an institutional work model to a flexible work model, and that has really taken off. The problem is we still have an institutional learning model that has lagged behind and we need a flexible learning model to match the flexible working model.
We think the future is about becoming more flexible and nimble. But a university might have hundreds of years of history and DNA that might create inertia. Despite that, they are in the right space, and businesses will fall over themselves to partner with a university to add rigour to their learning and development.
“Universities have shown their flexibility and nimbleness just in the last three months as everything went online almost immediately. Although steeped in hundreds of years of history, universities have shown their ability to adapt and that augurs well for the future. The delivery of microskills and just-in-time training is well accepted and needs to be developed and there is a role for industry to demonstrate what is required. In fact, there is a good case for partnerships to be developed between universities and companies that wish to upskill with rigour and discipline. This adds value to each party and thereby kick starts the economy to a higher growth plane!
It's important to be able to demonstrate to the outside world completion of a micro skills course that is credible in the marketplace and transferable. That's important from the employee's point of view but equally from an employer’s perspective in attracting the right people from the market. Having an external repository of micro skills that you can refer to without waiting weeks for accreditation from a university or a TAFE is an important element.
Industry needs to engage with universities. And universities need to engage with industry in order to deliver what is required to develop the menu of offerings relevant to today's marketplace and to employees. There is a viable dynamic and great exchange of opportunities here of which industry, universities, and most particularly employees can take advantage. With a digitally driven course development and offering methodology new courses and microskills certificates/badging can be delivered with great speed and rigour.”
Steve Somogyi: UniSuper, Higher Ed Services, CourseLoop.
It makes sense that there’s a lot more collaboration and sharing and it comes back to what we’ve discussed about industries working better together to define the skills they need. We also know cross industry, that a lot of our organisations are all after the same kind of skills. Obviously organisations might worry about competitive advantage, but there are economies of scale. We mentioned earlier the 7 million small to medium business organisations that don't have an L&D function or the resources to do this. More than ever, we need to help them survive and make sure their workforces thrive.
One of the important things is a shift in mindset away from that competition / war on talent approach to thinking in terms of an ecosystem of talent which we can all draw from at certain times. If there isn't sufficient investment into that ecosystem, it is at risk of collapse, especially when the migration channels are switched off.
Increased flexibility in the workforce almost necessitates the need to take an industry wide approach. It's very difficult to run a business case that one business should invest in the life long upskilling of an individual employee because we don't have a job for life anymore.
So a business might be doing what it needs to do in order to meet its strategic objectives but there’s also a role for the government to provide the ballast in the system for those who don’t have an L&D function or for continuity. There are huge economies of scale if we can somehow get the businesses within an industry putting competition aside for the purpose of upskilling and collaboration. And maybe that means having third parties like universities or like TAFEs really step up into that role and act as that conduit.
We moved to remote working very quickly: what would otherwise have taken five to ten years happened in just a few weeks. And while we are still learning, the benefits seem pretty strong from an employee and employer perspective. Will we move to a distributed workforce full time? Probably not, but we will probably settle on a split of two to three days per week. We see through all the survey results that this is most likely to become the new normal.
In terms of skills, resilience and adaptability are critical. People have mentioned how quickly our organisations, leaders and teams have responded. Innovation continues to be a key theme, as well as practical areas such as collaboration skill, leading remote teams, role clarity and managing performance remotely.
From our experience, the two skills most demanded by distributed working are collaboration and problem-solving. There are two kinds of problems that we're encountering. Firstly, we don't necessarily have the practice around collaboration for distributed workforce and problem-solving. Secondly, we don’t have the actual sophisticated technology tools to work round - we’ve got some, but they feel like they're in the very early stages of their development.
Businesses could spend a long time trying to get the perfect answer to what skills they need in the future and it would be different in every case. We know that data, cyber, digital and enterprise skills are going to be important. If you train people in these areas, it might not be 100% efficient, but it's going to be better than sitting on your hands and not upskilling. The strategic plan for any business is the bible for what skills you'll need. You should be able to deduce from that what skills you're going to need in the future and every business is going to be different.
From a PwC perspective, we are starting to think of a distributed workforce and what are the strategic advantages that a professional services firm can have compared to others? It very much comes back to the strategic plan and what are the skills necessary to drive competitive advantage and can they be delivered by people sitting at home. In a people business like ours there’s a question whether or not that's going to work long term.
At the moment, what we don’t have is a good way of badging what people are trained in. We are lacking a national system or indeed tools and commercial products that would enable us to gather the skills of an individual and put them into a format such as a CV. If you think about the way people write CVs, it's a narrative about themselves. There’s no external, objective, iterative recognition of upskilling. There are companies that come up with a nice neat badge for it, but then it's left up to your L&D team to interpret. We would love to see some leadership within an industry or across government around forming a framework that would make it much more portable.
Steve Somogyi, Chair of Higher Education Services Pty Ltd highlighted there are existing repositories available: “Higher Education Services, which is owned by 38 university vice chancellors, has a facility called “My eQuals”, which has all the historical full graduate qualifications of students throughout Australia and New Zealand going back to 2005. There is now a badging facility and will be available to all verification services and employers who want to check those skills, including graduate degrees and records of learning and micro skills.”
Partner, People & Organisation Consulting, PwC Australia
Tel: +61 (3) 8603 6504
Director and Head of Training Product Development, PwC's Skills for Australia, PwC Australia
Tel: +61 429 401 110