Are you heading for a digital skills shortage?
Jenny Roper, June 20, 2016
There aren't enough people with the right skills. Schools and businesses are failing to train them, so what can HR do?
“Ask a London technology entrepreneur what keeps them awake at night, and a shortage of available talent will often be the answer.” So says an excerpt from the recent Mayoral Tech Manifesto, issued to candidates by ministers keen that the next mayor of London keep the plight of London’s digital firms high on the agenda.
The cause for concern is understandable. The UK’s digital economy is the largest and fastest-growing in the G20 and already employs more than 1.4 million people. But this could be seriously stymied by the fact, according to the manifesto, that nine out of 10 of London’s new digital businesses are being held back by skills shortages, with 43% of those digital executives surveyed citing ‘shortage of talent’ as their biggest concern. Indeed, a separate survey conducted by techUK found that 93% of tech firms felt a skills gap was having a negative impact on their business.
It’s too early to tell what London’s new mayor Sadiq Khan will do about this challenge, and whether he’ll make good on his promises to improve connectivity, appoint a chief digital officer for the city, and establish a tech talent pipeline through the Skills for Londoners taskforce. But it is only a small part of the problem. The UK’s burgeoning tech sector is a national priority – or at least it should be.
But the much bigger issue is the impact digital skills shortages are having on all UK businesses, in all sectors – and that many organisations have yet to even realise the scale of the problem and its relevance to them.
A survey by digital charity Doteveryone (formerly Go.on UK) at the end of last year offers concerning insight into this wider problem. It found more than 12 million people and a million small businesses do not have the skills to prosper in the digital era.
A Digital Skills for the UK Economy report released by the Department for Business, Innovation & Skills at the start of the year found that, across the board of businesses in all sectors, 72% of large companies and 49% of SMEs suffer tech skill gaps. It warned that the “relative ranking of the UK, in terms of investment in IT and utilisation compared to other major countries, is slipping [which] may make the UK a less attractive investment location and place to do business”.
Natalie Gross is CEO of digital marketing, technology and commerce consultancy Amaze and a member of the British Interactive Media Association (BIMA) executive board, with special responsibility for education and skills. She paints a stark picture of the fallout of this: “At a foundation level we will not have an educated workforce that is equipped to do their jobs, which obviously translates to lower GDP, higher unemployment, lower salaries than other countries and lower standards of living. While that sounds big, it’s very real.”
But why is the UK doing so badly compared with the US, South Korea, Japan, Israel, and some of Europe? The reasons are complex. But a major factor is the still small percentage of graduates with the right kinds of business-ready digital skills.
While she praises the UK’s belief in start-ups and its customer-focused attitude, global HR director of telecoms firm Lebara Naleena Gururani says that where we fall down is encouraging enough students to take digitally-related courses.
“The thing the UK must focus more on is higher education in maths, economics, statistics and MBAs,” says Gururani. “This is where geographies like Asia have strength.”
For Gross the university issue is caused by problems earlier on: young people leaving education at 18 without basic digital literacy.
Back to school
“Our education system and government have been incredibly slow to understand the impact of digital, and changing the underlying systems that will fundamentally deliver on the UK’s ability to produce GDP out of digital,” says Gross.
For her the government’s move in 2013 to replace ICT (information and communications technology) with a new ‘computing’ curriculum (including coding lessons for children as young as five) is too little, too late. And while BIMA is lobbying for the introduction of a digital GCSE, Gross says embedding digital within the national curriculum should go further still.
“It is so late for the government and education system to be reacting, and only in the one area of programming,” she says. “Programming is just one aspect. There’s social media, experience of project management, analytics. We need that broader understanding of what digital skills are.”
She adds: “Fundamentally every single subject has to change, whether you’re studying geography, history or medicine. Digital changes the subject matter, not just the skill that you apply.”
Careers advice is also sorely lacking. “We know that the careers service in the UK has basically stopped,” says Gross. “A new Careers and Enterprise Council has been set up; we [BIMA] are very much behind them because a problem we find is inconsistent advice about our industry.”
“In schools, if you go to your guidance counsellor and say ‘I want to be a CIO’ or ‘I want a future in technology’ they won’t know what to tell you,” agrees Fiona Fanning, secretary general of the Council of European Professional Informatics Societies (CEPIS). “They won’t be able to show you a defined career pathway.”
This lack of awareness in schools of what a digital career might look like and how to get there means IT has an image problem, believes Fanning. “It’s telling that people often refer to the ‘IT guy’,” she says. “Not only is there the gender element, but there’s just generally a sense that it’s a nerdy guy who sits in the basement and doesn’t talk to people. That’s not the reality. There’s a massive amount of work to be done in tackling the image of the profession, and a big part of that should happen in schools.”
But while the problem is wider than a lack of women, the ‘gender element’ is key. Recent research by O2 found that almost half (47%) of 11- to 18-year-olds think the tech sector is more suitable for men. “While some progress is being made there’s certainly still a stark gender gap in the take-up of digital careers, which urgently needs tackling,” O2 HR director Ann Pickering comments.
An issue for all
So there is much work for UK government and educational institutions to do. But business shouldn’t underestimate its role. Gross reports there is valuable partnership work going on between tech companies and schools. “Where businesses might once have been involved in one-off initiatives, they’re starting to elongate these,” she says.
Notably absent from these initiatives, though, are non-tech firms – an absence telling of a much wider problem. The biggest issue the UK economy faces might not be that there is a talent shortage. Rather it’s that the majority of businesses are failing to recognise there is one, or that this affects them.
Recent research by Accenture provides insight into how few organisations think of themselves as ‘digital’. It found 55% of European businesses do not have a digital strategy to support their overall corporate strategy, with 61% saying they don’t want to be a digital leader in their industry.
The problem, explains Aoife Ni Luanaigh, senior manager (research) at the UK Commission for Employment & Skills (UKCES), is that when companies hear ‘tech skills’ they immediately think of Silicon roundabout. “We’ve found there’s this digital sector, which is high-tech firms, traditional IT or creative media, and people often think about those when they think about digital skills,” she says. “But actually digital skills are often to do with using technology, and they affect all firms in all sectors – so the public sector, retail, schools, healthcare providers and so on.”
Yet in the case of retail, for example, 20% of companies have serious digital skills gaps, according to UKCES – at a time when online shopping has grown to 12% of all sales. Further research by search firm DHR International offers insight into where the root of this might lie. It found only 5% of executive directors at leading listed ‘bricks and mortar’ retail firms have a background in e-commerce. “The problem is if you don’t know what’s out there, you don’t know what you don’t know. People aren’t aware of the opportunities,” comments Ni Luanaigh.
The initial barrier is firms often not having anyone on the board who is well-versed in digital. “Digital is poorly understood by leaders of companies as they are generally from the generation ‘before digital’. So it’s hard for them to understand current needs and predict future ones,”explains James Johnson, group CEO of IT recruitment agency Nicoll Curtin.
But there is evidence that awareness is dawning, says BT group HR director Alison Wilcox: “Successful digital transformation requires a change in the role of the CIO from managing the risk and complexity of IT to a business leader who brings change. Our research [BT CIO report 2016] tells us that the importance of the CIO at board-level continues to rise, with 72% of senior IT decision makers reporting that the CIO has become more central in the boardroom over the last two years.”
Still prevailing in many ‘non-tech’ organisations, however, is confusion around what ‘digital skills’ actually mean for them. “If companies aren’t clear what they mean by digital then inevitably there will be uncertainty on what skills are needed and how to obtain them,” says Paul Brown, head of HR, business and application services EMEIA at Fujitsu.
“For some companies it may be about leveraging the internet and automating activity. For others it’s about improving the customer experience. Many businesses do not have a strategy for digital themselves, and so don’t fully understand the digital skills needed in-house.”
“One of the problems is people say ‘digital’ and everyone goes ‘oh my god it’s tech, I’ve got to look knowledgeable’, rather than saying ‘what exactly do you mean? Do you mean how we develop the technologies we have in-house? Do you mean offering our products to customers through digital channels? Do you mean how we digitise the work we do to make it more efficient?’” says Danielle Harmer, chief people officer at Metro Bank. “Quite often you have conversations with people and they’re talking about ‘A’ and you’re talking about ‘B’.”
The skills fallout of such confusion is that those boards and companies aware of the need to upgrade to a more digitally-literate workforce get dangerously distracted, much like education policymakers, by coding and programming. “Though often what we talk about when we talk about digital skills is programming, what matters most are the basic skills such as using email effectively,” says UKCES’ Ni Luanaigh. “So it’s ‘IT user rather than IT programmer’.
“Small businesses are not going to need someone with advanced skills. They might need an IT officer and someone who’ll do basic data security and troubleshooting, but they won’t need someone who has high-level programming and coding skills.”
Lebara’s Gururani reports a similar confusion around data management. “Data skills should be more around insight and analysis and that’s where the gaps are,” she says. “You might have a data-focused skill but not enough data analysis expertise to understand what the data is saying to you.”
She adds that “there is a big correlation between digital literacy and the ability to understand customers and customer trends”, a concept also very much at the heart of Metro Bank’s digital skills strategy.
“You need people who can turn customer experience into simple workflows that are easy to use. We need people with good user interface skills and understanding,” says Harmer. “I think they need the attitude ‘my job isn’t to do something clever. It’s to do something that’s brilliant for customers and easy for colleagues.’”
“It’s about getting people to think about how we do things differently,” adds head of human resources and organisational development Sue Evans, whose public sector employer Warwickshire County Council has been through significant digital transformation, involving moving many services online and rolling out remote working and hotdesking.
Evans adds, of the need to undergo such a transformation as a local council: “We’ve had to be up to speed with digital because we’ve been under pressure to make spending cuts and do things differently. In the past we have had a highly dependent culture and attitude to public services. But we’re having to shift the way people think about that, steering the public and employees towards ‘digital by default’.”
But getting to the stage where the organisation understands just what kinds of digital skills it needs which employees to have is just the first piece of the puzzle. The issue still confronting businesses in all sectors is just how to access the right people, especially given that the limited tech talent the UK is producing is being rapidly hoovered up by the tech sector (and its enticing proposition of Ben & Jerry’s on tap and office slides).
Those tackling this suggest one solution is to develop tech talent in-house. Upskilling the staff you have makes the most sense anyway, points out L’Oreal’s HR director Isabelle Minneci. “For me the key to digital transformation is agility and the ability to constantly renew yourself. That’s why upskilling is very important.”
She adds that just shipping in digital specialists is particularly unsuitable for ‘non-tech’ firms as what they typically need is their existing employees (who are already knowledgeable about their brand and products) to upskill: “Of course you have to recruit digital experts. But the reality is your organisation can’t be transformed just with digital experts, because digital needs to be embedded in all functions. You have to make sure your commercial teams become digital, your marketing teams become digital...”
A mix of formal and informal learning will be key, says Evans. Formal training works best in areas such as information governance and handling, and use of social media, she reports.
Warwickshire County Council also runs conference-style events such as ‘Google Days’ where IT sets up a series of stands and workshops for employees to pop in to. “Some people don’t like Google Docs and we had to work harder with them to get them onside,” says Evans. “My PA didn’t like Google Docs so I said, ‘come on let’s go together’. Now she understands it and she’s better at it than I am. And she’s 62.”
Evans warns against over-reliance on formal training however. Though this approach works for most technical skills, there are some capabilities that will require a more on-the-job, stretch project approach, she says. “It’s more about experience and getting people to be more innovative and creative,” she explains, adding: “I don’t think you teach this stuff. You have to help broaden people’s experience, and give them opportunities to try new things.”
“People have different learning styles and the best way to increase knowledge is to offer multiple different ways of learning, whether this is classroom training, computer-based or team meetings,” adds Luke Fairless, technology director for security programme and capability at Tesco (who recently announced a three-year deal with Pluralsight to access its online technology course library, as part of a wider move to upskill Tesco’s workforce digitally). He adds: “There is no one way to address such a gap, otherwise everyone would already be doing it.”
Key to formal and more informal internal talent development initiatives alike, warns managing director at Accenture’s UK and Ireland Technology group Emma McGuigan, is not to assume younger employees will naturally possess these skills. “There is an inherent disparity between skills young people have and where they can apply them,” she says. “Anecdotally, you can talk to young people and there’s not necessarily a clear understanding of how the digital skills that they’re used to using every day can be applied.”
Indeed, a recent report by Barclays found that while 40% of businesses rely on younger employees and graduates for digital skills, 32% of millennials fear being shown up in the workplace because of their lack of digital skills.
The war for tech talent
So, digital training for all is crucial for all organisations in all sectors. Metro Bank’s Harmer points out though, that at least a handful of specialists will still be needed in the majority of organisations, bringing the proposition of competing with tech firms back to the fore. Looking to your cultural offering, and the fact it may well be other elements besides free breakfasts and an uber-trendy office is vital, she says. The freedom to innovate and be agile will often be the pivotal draw.
“People going into this profession must be joining it because they like creating stuff and having freedom, and the instantaneous nature of digital.
So there’s no point recruiting these people without giving them the opportunity to do and be what you hired them for,” she says. “That’s the challenge we have. I think the perception is we move slower than tech companies. That’s an issue for us to fix. You have to show people when that is the case, because that’s where frustration lies. A clear employment proposition is important.”
Just as important will be ‘non-digital’ organisations getting involved with school initiatives. Only by showing the array of digital skills-related opportunities available in a wealth of sectors will the UK see prospective talent both embrace digital, and head ‘non-digital’ firms’ way.
Patrick Bermingham, group HR director at automotive engineering firm and consultancy McLaren, describes the power of this. “People don’t know the opportunities out there, where you could work in anything from healthcare, to designing a piece of sports equipment, to working with one of the big players in global audit,” he says. “You see school kids lining up when they hear about those kinds of opportunities.”
BIMA’s Gross is very encouraged that there is a huge, highly achievable opportunity for the UK if business, government and educational institutions work together to seize it. “You have to think: what if we do have that capability, where does that then put the UK on the world stage?” she says. “Most countries are vying for that position, but you could count the outstanding countries on one hand. We’ve got great systems – albeit slightly archaic – in terms of our education. We’ve probably got better historical building blocks than many others. But it’s how we go on now to use that.”