Skills mismatch is fast becoming a pressing recruitment issue. According to the NIESR (2023), 30% of graduates in the UK are more educated for their jobs while 34% are working in roles unrelated to their jobs. However, education is merely a small factor in skills mismatch.
For employers, these mismatches can mean higher recruitment costs, longer hiring times, reduced business productivity, and increased employee turnover. When a mismatch occurs, it’s usually because the employee is underqualified or overqualified for the role. This typically leads to job dissatisfaction, especially when employees feel their skills are not used to their full potential.
A talent can have the formal education required but lack specific hard or soft skills to succeed in a role. Statistics from Oxford show that 66% of large UK enterprises struggle to find employees with the right skills. These occurrences continue to drive skills-based hiring, especially in Europe.
In this article, we’ll discuss what skills mismatch is all about and how both employers and candidates can avoid it.
What is a Skills Mismatch?
Skills mismatch occurs when a candidate's skills and competencies don’t match the role or job opportunity they accessed. It can be a case of under-qualification or over-qualification. This is due to gaps in education, lack of training, outdated skills, or a rapidly evolving job market that requires new skills and aptitudes.
Skills mismatches can lead to limited career progression, lower job satisfaction, and reduced opportunities for personal growth and self-worth. For example, an employee may have a high level of qualification but lacks the specific skills for a role; leading to frustration and disengagement. Additionally, it can potentially affect the individual’s mental health and career satisfaction as well as the business’s productivity.
The Skills Mismatch vs. Skills Gaps vs. Skills Shortages
While the terms skills mismatch, skills gaps, and skills shortages look similar, they address different issues in the job market. Knowing the differences helps understand the root causes of skills-related inefficiencies in your business and how to fix them.
Skills Mismatch
This occurs when there is a gap between employees' skills and what’s required in their current role or the broader job market.
For example, a company’s tech team may have developers with C++ experience while the industry moves to newer, more efficient technologies like Mojo. This gap in relevant skills can slow down productivity and innovation and create a workforce misaligned with the company’s objectives.
Rapid technological change, shifts in market demand, and poor education systems that are not aligned with the industry's ever-changing needs are the main causes of skills mismatches.
Skills Gaps
Skills Gaps occur when a specific set of skills is missing from employees or job seekers for a particular role. For example, a marketing agency may struggle to find SEO managers with the right combination of hard and soft skills, such as strategic thinking, analytics, and reporting.
These skill gaps can prevent businesses from filling critical roles, reducing their competitiveness and growth. Fixing skills gaps often means targeted training programs, partnerships with education providers and internal mentoring programs to develop the required skills within the team.
Skills Shortage
Skills or talent shortages occur when there are not enough people with the top skills for the available jobs in a particular industry or role. This is often seen in industries growing fast or requiring highly specialized skills, such as healthcare or advanced technology sectors.
A classic example of a skills shortage is the ongoing need for qualified nurses in large hospitals where the demand for healthcare professionals consistently outstrips the supply.
Impact of the Skills Mismatch Issues
The skills mismatch issue affects the growth of both professionals and businesses. Individuals stuck in jobs that do not best match their skill set can feel dissatisfied with their career growth.
Additionally, it could lead to unemployment, underemployment, and reduced career prospects, which can have a long-term impact on personal growth and economic stability.
Conversely, having employees with a skills mismatch can lead to job insecurity, limited career progression and reduced productivity. Companies that can’t find the right talent face reduced productivity, increased operational costs and reduced competitiveness.
A mismatched workforce can prevent a business from innovating and adapting to market changes that impact the bottom line. High employee turnover due to dissatisfaction with job roles can cost organisations a lot of money as they have to invest time and resources into repeated hiring and training processes.
Skills Mismatch Affects the Global Economy
The macroeconomic implications of skills mismatches go beyond individual businesses. At a macro level skills mismatches can contribute to higher unemployment rates and make a country less attractive to investors.
When the economy doesn’t create jobs that match the skills of the workforce it leads to inefficiencies. As a result, there is an increase in underutilisation of human capital which can stifle economic growth and social welfare.
According to Boston Consulting Group, over 1.3 billion people globally experience the skills mismatch issue, whether they are overqualified or underqualified for those positions. The global economic impact of this issue was estimated to lead to at least $8 trillion in unrealized GDP for the global economy in 2018. The global economy and societal environment will be impacted without addressing the skill mismatch issue.
Causes of Skills Mismatches
Several factors contribute to skills mismatches, each playing a part in the mismatch between job requirements and employee capabilities. Knowing these causes is the first step to minimising the impact and getting a more efficient workforce.
Poorly Written Job Descriptions
Job descriptions help in attracting the right candidates with the right skills. When job descriptions are vague, out of date or include unrealistic expectations they can lead to skills mismatches. They attract applicants whose qualifications don’t match the actual needs of the role causing a mismatch.
For example, job ads that overemphasise experience rather than specific skills may exclude candidates who could do the job with the right training. To avoid this businesses should focus on writing skills-based job descriptions that clearly outline the essential skills required.
Gaps in the Hiring Process
Inefficiencies in the recruitment process can also lead to skills mismatches. Poor screening methods, biased selection criteria and ineffective interview techniques can all lead to hiring candidates whose skills don’t match the job requirements.
For example, traditional hiring practices often prioritise academic qualifications and work experience over practical skills and competencies possessed so hires may not be equipped to handle the day-to-day tasks of the job. Implementing skills assessments and focusing on both soft and hard skills during the hiring process can help fill these gaps and get a better match between candidates and roles.
Emerging Technologies
Technological change is happening at an incredible pace and is creating new roles and making others redundant. This pace of change can outstrip the ability of workers to adapt and create a mismatch between current employee skills and emerging job requirements.
For example, the advancement of artificial intelligence (AI) and machine learning (ML) has created demand for data scientists and analysts roles that require highly specialist skills that many current workers don’t have. To keep up with technological change businesses need to invest in training and development opportunities so employees can upskill and reskill as needed.
Solving the Skills Mismatch Issue
In addressing skills mismatches, businesses need to implement targeted solutions that match workforce capabilities to job requirements. These solutions involve proactive measures during the hiring process, ongoing employee development and a culture of continuous learning.
Identify Soft and Hard Skills
Soft skills like communication and problem-solving are just as important as hard skills like data analysis or technical proficiency.
Employers should test for both during the hiring process, especially for roles where collaboration and adaptability are key. Identifying essential soft and hard skills required for each role can optimize the onboarding process, get a better view of candidates and reduce the risk of skills mismatches.
Write a Skills-Based Job Description
A job description is the starting point of the hiring process. It should list the soft and hard skills required and use specific language to describe the expertise needed. Skills mismatch typically occurs when companies and professionals don’t clearly express their expectations.
Action verbs and clear hiring criteria will help candidates self-assess their fit for the role so they can apply. This will attract the right talent and speed up the recruitment process by reducing the number of irrelevant applicants.
Skills Assessments in Hiring
Including skills assessments in the hiring process allows businesses to get a better measure of a candidate’s job-specific skills. Tech1M has built skills assessments for specific roles or businesses can create custom tests for the most important skills for each role.
These assessments will give you valuable insight into a candidate’s abilities and align the hiring process with the actual requirements of the job and reduce the risk of skills mismatches.
Transferable Skills
These are skills that can be applied across different roles and situations. As the job market continues to evolve the importance of transferable skills has grown and businesses now expect that a large percentage of job skills will change in the next few years. Hiring candidates with strong transferable skills can help businesses build a more flexible workforce that can adapt to different challenges and roles as needed.
Closing the Skills Gap
A skills gap issue persists globally. According to the Korn Ferry report, it could result in a loss of $8.5 trillion in annual revenue by 2030. Companies could experience a talent shortage that significantly affects their growth and that of the GDP.
To fix the skill mismatch issue and close the talent shortage gap, businesses need to invest in comprehensive professional development programs that support continuous learning and skill development. These programs will close the existing skills gap and also prepare employees for future challenges and build a more robust workforce.
Professional Development Plans
Professional development plans are flexible documents that outline an employee’s skills, career goals and aspirations. These plans should be tailored to each employee, identify specific skill deficiencies and gaps, create professional development plans and set clear objectives for skill development. Performance reviews, regular feedback and access to resources like training programs and mentorship opportunities will be key to these programs.
Onboarding
A good onboarding process is critical to getting new hires into the business and equipping them with the skills to do the job. Detailed onboarding programs should teach both the practical skills for the role and the company’s values and ways of working. Pairing new hires with mentors or buddies can also help them get through their first few weeks and provide guidance and support as they settle in
Keep Developing Your Employees
Continuous learning and skill development are part of any modern business. Creating a culture where learning is enabled and supported will help businesses stay ahead and employees be happier and more likely to stay with the business.
Regular skills gap analysis will show areas for improvement and businesses can implement targeted training and development programs.
Regional Skills Shortages
In some cases, skills shortages can be regional, and businesses will need to look for alternative solutions to meet their talent needs. Two ways to address regional skills shortages are outsourcing and partnering with local educational institutions.
Outsourcing as a Solution
Outsourcing allows businesses to expand their talent pool beyond their local area, access candidates with the required skills. However, by tapping into the global workforce businesses can overcome regional skills shortages and find the talent they need to achieve their business goals.
This is especially useful for roles that require highly technical skills where the local talent pool is small.
Partner with Local Educational Institutions
Partnering with local educational institutions can help address regional skills shortages by matching education to industry needs. Businesses can work with schools and universities to develop curricula that reflect current market demand, and through education industry partnerships can provide internships and job training programs. These partnerships will create a pipeline of skilled talent and also benefit the wider community.
The Cost of Doing Nothing
Leaving the skills mismatch issue to chance without taking proactive steps will cost business. The costs of mismatched skills are reduced productivity, increased turnover and decreased competitiveness all of which will undermine the business.
Financial Impact on Business
Skills mismatches can cost businesses big time due to reduced productivity and recruitment costs. When employees aren’t equipped for their role they may struggle to perform and produce less and be less efficient.
High turnover rates due to job dissatisfaction and other types of skill mismatches will increase the cost of hiring and training new employees and put more pressure on the business.
Opportunity Costs and Lost Productivity
The opportunity costs of skills mismatches can include missed business opportunities, delayed projects and lost revenue. When employees can’t do their job effectively it can cause bottlenecks and setbacks that disrupt the workflow and impact business performance.
Lost productivity is a common outcome of skills mismatches, employees without the right skills may need more time and support to complete tasks, slow down progress and reduce the business’s ability to achieve its goals.
TL; DR Key Takeaways
- Skills mismatches happen when the candidate’s skills don’t match the job requirements, inefficiency. Fixing these mismatches will help employee satisfaction and organisational productivity.
- Matching soft and hard skills to the job role will ensure a better fit between the candidate and the position. A balanced approach to skills assessment will improve hiring and reduce turnover.
- Skills-based job descriptions will outline the competencies required, and attract candidates who meet the role requirements. This will streamline the hiring process and reduce mismatches.
- Focusing on transferable skills will create a versatile workforce that can adapt to changing job demands.
- Continuous learning and professional development will bridge the skills mismatch.
- Good onboarding processes will help new starters settle in quickly and fill any existing skills gaps. Including full training and mentoring will boost early employee performance and integration.
- Regular skills assessments will allow organisations to identify mismatches early and implement targeted upskilling or reskilling. Proactive skills management will keep employees’ skills aligned to job requirements.
- Using technology such as AI-driven assessments and adaptive learning platforms will optimise skills training. Technology will give insight into workforce capabilities and guide learning interventions.
- Skills mismatches will cost more, reduce productivity and miss opportunities. Instead, take a proactive approach to talent management and be competitive.
Whole talent management that includes thoughtful hiring, continuous development and the management skills, strategic organizational skills and alignment is key to long-term success. This will help businesses navigate the complexity of modern workforce demands.
Final Thoughts
Skills mismatches are a major barrier to success, productivity, employee satisfaction and competitiveness. However, with the right steps businesses can improve hiring, reduce turnover and have a more aligned and effective workforce.
From writing skills-based job descriptions to investing in continuous employee development there are many ways to reduce skills mismatches and get the right people for your business.
Fixing the skills mismatch issues and having the right skills in the workforce can increase your business’s chances of success and stand out in the competitive space.
It’s all about continuous learning, strategic hiring and proactive workforce development so both employees and businesses can win in the modern world.
Tech1M has introduced 1M talks a series of bite-sized talks to help bridge the skills gap issue. You can now give a 15-minute virtual talk and inspire and educate new and upcoming professionals on tips in your industry. Visit www.tech1m.com/give-a-talk to learn more.
