Gary Weinstein explores recent research into the lack of soft skills in UK organisations

We all know that behind every successful high-performing business is a team of employees, managers and leaders who demonstrate good communication, decision-making and team working skills. However, until now it has been difficult to quantify and qualify what the importance and value of these soft skills are to UK plc.

In January 2015, the Backing Soft Skills campaign was launched, sponsored by McDonald’s and backed by companies including Tesco and Gelder Group, and supported by organisations such as CBI, FSB, CIPD, NIACE, learndirect and City & Guilds.

To quote the report summary, we know that “as a nation we are not investing enough in skills such as communication, teamwork and time management”, and now we have the stats to back this up. By 2020, more than 535,000 UK workers will be significantly held back by a lack of soft skills – an issue forecast to affect all sectors. Again by 2020, soft skills will contribute £109 billion per annum to the UK economy – an increase of £21 billion from 2015. Ninety-seven per cent of UK employers believe soft skills are important to their current business success and more than 50 per cent say skills like communication and teamwork are more important than traditional academic results – 75 per cent believe there is already a soft skills gap in the UK workforce. UK employees say they struggle to sell their soft skills and one in five would not feel confident describing their soft skills to an employer and more than half (54 per cent) have never included soft skills on their CV.

In November 2014, the UK Commission for Employment and Skills (UKCES) published the Growth through People report and its key recommendations. Supported by the CBI and TUC, it listed five priorities for action during the length of the new UK parliamentary term:

1.     Employers should lead on skills and government should enable them
2.     Improving workplace productivity should be recognised as the key route to increasing payand prosperity
3.     ‘Earning and learning’ should be the gold standard in vocational education
4.     Education and employers should be better connected to prepare people for work
5.     Success should be measured by a wider set of outcomes not just educational attainment.

So what is the connection between these two reports/campaigns and what does it mean for you and your business? For employers, educational institutional and training providers, the challenge is how to make the changes necessary to achieve the outcomes McDonald’s and UKCES are advocating.

Let’s lead with the McDonald’s report and its emphasis on soft skills, which are an essential component of any skillset development programme. Yet, very often soft skills are not embedded into the educational/academic curriculum, particularly at Further Education (FE) College, Higher Education (HE) University and apprenticeship level, and nor the fabric of employee development in business.

As the UKCES report says: “[pullquote]Skills play a critical part; they have become the global currency of the 21st century[/pullquote]. Without proper investment in skills, people struggle to find employment, business opportunity does not translate into business growth and the UK will not compete to its full potential in the global economy.” It goes on to state “securing a foothold into a good career is still harder than it was twenty years ago”. Developing core business and soft skills will help to change that!

The McDonald’s report identifies key soft skill clusters (also known as employability skills):

• Communications skills
• Decision-making/problem-solving skills
• Self-management skills
• Teamwork skills
• Professionalism skills
• Leadership skills.

These are not just important for customer service orientated companies like McDonald’s and Tesco but also for professional service organisations. A survey of CFO’s found that 55 per cent considered the biggest challenge in recruiting accountancy professionals was finding applicants with the necessary soft skills beyond the normal competences and qualifications expected.

Additionally, a different UKCES study confirmed the increasing importance and demand for soft skills in the health and social care; professional and business services; retail and wholesale; creative industries, media and entertainment; and manufacturing sectors.

The CBI places particular emphasis on the soft (employability) skills of graduates and other young people: “Businesses want graduates who not only add value but who have the skills to help to transform their organisation in the face of continuous and rapid economic and technological change. All graduates need to be equipped with employability skills. Employability covers a broad range of non-academic or softer skills and abilities which are of value in the workplace. It includes the ability to work in a team; a willingness to demonstrate initiative and original thought; self-discipline in starting and completing tasks
to deadline.”

The McDonald’s report goes on to say: “A recent pan-European survey of Chief Executives also highlighted the widespread perception that many young people lack the soft skills to gain their first job and to progress up the career ladder. The survey found that 54 per cent of respondents felt that young people were lacking in soft skills. ‘Entrepreneurship skills and acumen’ were also considered to be lacking among young people by 24 per cent of respondents.”

Similarly, the UKCES report notes “a long-term decline in entry level jobs in industries that young people traditionally go into, and fewer opportunities to combine earning, learning and to progress”. This will be compounded by the fact that “by 2020 nearly half of the workforce will be qualified to degree level and above” however, “in certain sections of the economy businesses face long-standing skills shortages, for example in manufacturing and business services”.

It’s not enough for employers to state that young people lack the soft skills to gain their first job, and expect it is only the responsibility of FE and HE institutions to train their students and undergraduates in soft skills. With an improving economy and increasing demand for UK plc products and services, it’s time for employers to step up and recruit young people, irrespective of their soft skills competency, and put in place a soft skills training programme to address it.

As the UKCES report says: “To meet the skills and employment challenges we face, businesses, and the people who work in them, must be in the driving seat”… “UKCES has consistently argued that strong employer leadership is the key to tackling skills and productivity challenges”… “This is not about big business calling the shots – it’s about businesses of all sizes taking responsibility, with their employees and in their supply chains, for building a skilled workforce now and into the future, not leaving it to government or the education sector.”

The McDonald’s report estimates that between 2012 and 2020 an additional 11.6 million workers will need to be recruited through a combination of replacing retiring employees (10.36m) and expanding the UK plc workforce (1.25m employees). Sectors that are likely to see the largest overall labour increase demand are:

1. Health and social work
2. Education
3. Transportation
4. Manufacturing.

This is certainly the situation for one of our clients in the manufacturing sector where an aging workforce means that within a decade many staff will be retiring, so there is an urgent need to capture/retain their knowledge and expertise by passing it onto the new generation.

There is concern that this increase in demand will be hampered by employers failing to recruit because of insufficient soft skills among available candidates. However, as mentioned above, if employers commit to putting a soft skills training programme in place then this need not become an issue nor a reality.

The risk is that if employers don’t do their part to address the soft skills shortage then by 2020 the cumulative level of unfilled vacancies could reach more than a million, according to the McDonald’s report and goes on to state “Although the result of a soft skills shortage may be a failure to recruit, there is also the possibility where recruitment has taken place that the soft skills attributes of employees is insufficient to the extent that those employees operate significantly below required levels. A skills problem of this type is called a skills gap. Of course, skills gaps can occur because the needs of a role changes due to external or internal factors, and where investment in upgrading an individual’s skills lags behind.”

This skills gap will be acutely felt by the following sectors (in descending order):

1. Accommodation and food services
2. Retail
3. Health and social work
4. Manufacturing
5. Business administration and support services
6. Professional, scientific and technical.

According to the McDonald’s report, the loss of productivity due to the soft skills shortage – when combined with the cost of the skills gap – for UK plc is quite significant, growing to more than £8.4 billion per annum by 2020. If nothing is done about arresting it, then it will be acutely felt by the following sectors (in descending order). Additionally, the cost of the skills gap will be borne by some industries more than others (shown in brackets):

1. Manufacturing (10 per cent)
2. Health and social work (10 per cent)
3. Property services (9 per cent)
4. Education (8 per cent)
5. Transport and storage (8 per cent)
6. 6.Financial and insurance (8 per cent)

Over the next five years, the skills shortages and skills gaps could prevent employers from filling vacancies unless there is a change in attitude towards soft skills development and more employers take on the responsibility for addressing the skills gaps in their employees by providing soft skills training development programmes for their workforce.

Understandably, the UK government’s focus is on supporting educational institutions; programmes for young people Not in Education, Employment, or Training (NEET); apprenticeships and some funding for 24+ through the Advanced Learning Loan scheme. 

FE colleges and HE universities must also do more to develop soft skills in our future workforce while studying at their educational institutions. The government needs to allocate funding to support this, and not just prioritise work experience, as they are doing at the moment. 

As the UKCES report states: “Over the last decade or more, there has been a focus on whether schools, colleges and universities are producing people with the skills and qualifications to meet the needs of business and the economy. But this has left little room to examine how skills are actually developed and used in the workplace to drive performance, productivity and pay – 4.3 million employees have skills that are not being fully used.” 

There is no support for young people who pass through our institutions and then into employment without incident – partly because it is assumed that there is no problem. They’ve made it through to employment so that’s that.

As can be seen from the above data, this is in fact not the case. Young people at the very beginning of their careers still need help with core business and soft skills in order for them to lay down a solid foundation on which to build their future careers.

Because it’s no longer seen as the UK government’s responsibility, it must fall upon employers. The above data clearly shows that employers agree that the level of competency in core business and soft skills of young people is a problem that needs to be tackled, however, too few employers are rising to the challenge and taking responsibility for doing something about it.

I regularly meet employers who absolutely get the need to improve business and soft skills in young employees and applaud the Backing Soft Skills campaign and similar initiatives. When asked what they are doing to develop their own employees, they say something about their employees already having satisfactory soft skills and what they don’t have will be gained from working alongside their colleagues over the years to come.

So is it really a problem then? The evidence suggests it is. For me, the real problem is lethargy – a lack of commitment to do something about it at the grassroots level – i.e. once in employment. The UKCES report agrees: “Whilst the UK has many of the highest performing businesses in the world, there is a ‘long tail’ of poorly performing firms – too few UK firms adopt high performance working practices such as training…”

This doesn’t mean that every employer has to ensure they have internal resources to deliver business and soft skills programmes. The majority of companies will not have a large enough workforce to viably sustain such an internal service and may only employ a few young people each year, therefore not enough to invest in internal resources to deliver such a programme. In those cases, they could consider outsourcing to an external training provider with business and soft skills programmes specifically designed for the development of new young and graduate employees, as well as the broader more-experienced workforce.

A strong workforce with well-rounded and developed technical, professional and soft skills strengthens UK plc for long-term economic output and growth. 

A fully referenced version of this article is available on request.