The financial sector is a massive contributor to the UK economy. But to sustain this position long-term, one thing is clear: businesses need to take stock of their capabilities and put training strategies in place to fill the capability gaps.
This was made clear in our research about the UK skills gap, which found that it is already far too wide to support a healthy recovery. In fact, what we are dealing with now is much more severe. The skills gap has widened to become a capabilities gap, and there is a vast imbalance between capabilities businesses need, compared to those they actually have.
Our Beyond Skills report examined the state of the skills gap through the lens of 500 C-suite and 500 HR leaders. The research found that 71% of businesses that saw growth over the last year had invested in employee development during 2020. Businesses that prioritised investment in their people set them apart from their competitors, ultimately positioning them to sustain growth during the most turbulent of times. Yet for financial services, 51% of those surveyed said they had made cuts to their learning and development budgets. It was, therefore, less of a surprise to learn that this sector experienced the weakest growth of any surveyed. The sector chose survival over building capabilities by a significant margin (68%). This not only left the industry unable to deal with challenges associated with new ways of working, but also caused concern about the future implications of their organisation’s skills gap. These findings were striking, particularly for a data-driven sector that prioritises operational efficiencies and digital transformation.
Building capabilities for those already in-house is the most effective long-term strategy. It is also the quickest way to grapple with changes to new applications like blockchain and artificial intelligence, which accelerated within a matter of weeks during the pandemic. This left major cracks in the skills and capabilities businesses needed to thrive. And this is where many organisations have turned the wrong corner, leaning on recruitment to bandage these missing links. In reality, though, this is an expensive, short-term solution that will not solve the tremendous problem we have in front of us. By reducing learning and development budgets, and leaning on other solutions like recruitment, the additional strain was placed on those already in the industry. So much so that nearly three-quarters of respondents in the financial sector reported concern about the lack of capabilities, such as digital skills, on staff mental health.
The knock-on impact of the capabilities gap on mental health is not difficult to see. The impact of workplace-related stress has been widely reported, but little has been said about the impact of a lack of capabilities on employee well-being. This is an issue that must be addressed now, with over 65% of respondents expressing worry. We’ve survived a pandemic, and now businesses need to turn their attention to supporting their people who will help drive the return of a healthy economy. Without a doubt, this will require engaged and motivated employees who feel confident in the capabilities they have to carry out new and demanding tasks. Investing in these skills will build confidence and restore a sense of stability for the workforce that is necessary for the financial sector’s contribution to the UK economy.
At Avado, we see a need for a capabilities revolution – a complete overhaul of the skills system with much more focus on building people and business capabilities to close the rapidly widening gap. This cannot be done by just one organisation. The conversation must shift beyond skills with more attention on the detriment these gaps will have on our economy, but most importantly, the people bringing it back to life.