By Daniella Seiler | April 30, 2021

A new survey indicates that skill building is becoming a common practice, with social and emotional skills in high demand. There is also a clear recipe for successful skill transformations.

Over the past year, the COVID-19 pandemic has rapidly accelerated the need for new workforce skills. The swift rise of digitization and remote work has imposed new demands on employees, who now often require different skills to support significant changes in work processes and business priorities. Employers are also expected to assist in developing these skills to ensure both the business and its employees are prepared for the future.

In McKinsey’s latest Global Survey on reskilling, the urgency of addressing skill gaps is evident and more crucial than ever across industries. Most respondents believe that skill building—more than hiring, contracting, or redeploying employees—is the best way to close these gaps. They have intensified efforts to reskill or upskill employees since the pandemic began. The results also highlight a shift toward developing social and emotional skills, such as empathy, leadership, and adaptability. Regardless of the specific skills, there is a clear recipe for successful skill transformations: large-scale, programmatic efforts to support skill building, enabling employees to adapt to fundamentally changing role requirements or transition into new ones. Companies that follow all nine practices supporting a skill transformation—such as assessing future skill demands, designing initiatives to close skill gaps, and establishing dedicated learning structures—are nearly guaranteed success.

During the Pandemic, Companies Have Made a Significant Shift Toward Skill Building

Skill building has become more prevalent than before the pandemic, with 69 percent of organizations engaging in more skill-building activities now compared to the pre-COVID-19 period.

The survey suggests an increased urgency in addressing skill gaps. A majority of respondents (58 percent) report that closing skill gaps in their companies’ workforces has become a higher priority since the pandemic began. Among five key actions to close these gaps—hiring, contracting, redeploying, releasing, and building skills within the current workforce—skill building is now the most prevalent. Sixty-nine percent of respondents indicate that their organizations are doing more skill building now than before the COVID-19 crisis, a significantly higher increase than reported for the other actions. This finding aligns with predictions from previous surveys conducted before the pandemic.

Redeploying talent to new roles, which often requires some degree of skill building, has also become more common over the past year. Forty-six percent of respondents report an increase in redeploying talent within their organizations, making it the second most critical activity for closing skill gaps.

Additionally, the results suggest that this commitment to skill building represents more than a one-time investment. More than half of the respondents say their companies plan to increase spending on learning and skill building over the next year, compared to investments made since the end of 2019.

Skill-Building Efforts Have Focused on ‘Softer’ and Advanced Cognitive Skills

The survey inquired about 25 specific skills that companies have prioritized for reskilling. More than half of the respondents report a focus on developing leadership, critical thinking and decision-making, and project management skills. Compared to 2019, many of the skills with the most significant increases in focus fall into two categories: social and emotional skills (accounting for three of the five biggest increases) and advanced cognitive skills. For instance, the share of companies addressing interpersonal and empathy skills has nearly doubled in the past year.

Basic digital skills have also become a clear priority since the pandemic began, with a 16 percentage point increase from 2019. Notably, there are industry differences: respondents from advanced industries and industrial organizations report less focus on building basic digital skills, likely because these skills were already present before the pandemic. However, these respondents are more likely to prioritize technology design, engineering, and maintenance, with 50 percent indicating this focus, compared to 15 to 28 percent in other industries. Conversely, peers in the public and social sectors, as well as healthcare and pharmaceuticals, are nearly twice as likely as those in industrial organizations to focus on interpersonal skills and empathy.

Getting Skill Transformations Right: The Recipe for Success

Even before the pandemic, respondents recognized that skill gaps were a pressing issue. While previous surveys indicated that skilling programs were in early stages in 2019, companies now appear to have made significant progress. Half of the respondents state that their organizations have begun a skill transformation to support employees’ skill building in a large-scale, programmatic way. For those that have, the benefits are clear: between 71 and 90 percent report positive impacts on four company outcomes—the ability to realize company strategy, employee performance and satisfaction, and reputation as an employer. Furthermore, reskilling yields positive economic returns, such as increased productivity and improved employee morale.

Despite the enthusiasm, successfully designing and implementing skill transformations is challenging and relies on nine key practices that must be properly applied. Research indicates that the more of these nine practices a company implements, the higher its likelihood of an effective transformation.

These nine practices support three different phases of a skill transformation:

1. Scout: Rapid workforce planning to identify skill gaps by comparing the company’s current skill supply with the demand for certain skills, based on strategic ambitions, digital agendas, and overall business models.

2. Shape: Developing a skill strategy to close anticipated gaps by finding the right mix of actions—building skills, redeploying, hiring, contracting, and releasing employees. This phase also involves decisions on learning formats, designing and delivering learning journeys, and setting up necessary infrastructure and governance for learning.

3. Shift: Executing and delivering skill-building efforts at scale across the organization, ensuring the workforce is building new skills, establishing dedicated organizational structures for learning (e.g., skilling hubs), and implementing a rigorous yet dynamic system for tracking the impact of learning.

The results indicate that all nine practices are important—there are no shortcuts. Organizations that have implemented all nine report a nearly 100 percent chance of a successful skill transformation, which is 2.5 times higher than the success rate for organizations that have not implemented at least one of the practices.

While all nine practices matter, some are implemented more successfully than others. Companies tend to excel in the three practices related to workforce planning and assessment: assessing future skill demands (56 percent), determining the current supply of skills (56 percent), and analyzing skill gaps (54 percent). Smaller organizations are particularly effective in workforce planning, likely due to greater transparency around organizational needs, better knowledge of employees, and the ability to create a more accurate baseline of skills. These organizations also experience higher success rates in skilling compared to larger counterparts.

Conversely, companies struggle more with practices related to the infrastructure and delivery of skilling efforts. For example, only 23 percent of respondents from companies that have started a skill transformation report implementing dynamic tracking of workforce performance and overall business impact. However, performing each of these practices is crucial to fully benefit from a skill transformation.

Beyond Digital Learning: Applying a Mix of Formats

Digital learning has become ubiquitous, especially during the pandemic, and survey results suggest it is effective. Respondents who believe digital learning suits their employees, or who favor a combination of in-person and virtual sessions, report higher overall success rates in skill transformations.

However, the survey also indicates that a varied, multichannel approach to learning and skill development works best. Among 12 learning formats, respondents find an average of five suitable for their employees. In companies that have begun skill transformations, success rates are higher when more learning formats are employed: 50 percent success for those using fewer than four formats, and over 70 percent for those using eight or more.

Additionally, less common learning methods, such as peer learning teams and expert coaching, are linked to successful transformations. This underscores the importance of team-based learning, which is a crucial component of effective skill development strategies.