Business leaders everywhere have a watchful eye on spiraling inflation, which is affecting everything from the cost of raw materials to the price of finished goods and even threatening the global economy. But there is another type of “inflation,” which receives far too little attention and may, over time, inhibit productivity. That is skills inflation, in which the value of certain skills erodes over time.
It’s well known that inflation diminishes value; for example, $1.00 today can only buy about $0.60 of what it could purchase in 2000. The same value erosion also applies to skills. What was cutting edge 20 years ago is simply not as valuable today; likewise, what we value today will not be worth as much going forward.
I first discussed this concept with Andreas Schleicher, who serves as director for education and skills and special advisor on economic policy to the Secretary-General at the Organization for Economic Co-Operation and Development (OECD) in Paris. “Twenty years ago, when you learned something, you could actually use that knowledge for a long time. Today, the world around you changes exponentially, while your capacity may only improve linearly,” Andreas told me.
Just like money loses its value in a high-inflation environment, so do skills in a fast-changing workplace. “Skills are very much a currency in our lives,” Andreas added. “So, in this context inflation is something that can push us forward … to constantly think about how we develop and retain value.”
Printing More L&D “Money” Won’t Work
Skills inflation is being compounded by the fact that much of the learning and development (L&D) industry is essentially “printing more money” — that is, offering quick fix e-learning that only satisfies immediate demand, without accounting for skills that need to be developed for the future. As a result, more and more near-term skills are being built at the expense of upskilling and reskilling for the future.
For example, it used to be that computer programming skills in a language such as Python sufficed. Now, knowing Python is the equivalent of table stakes for a programmer. The real value is in constantly honing Python skills to continuously deliver more.
This parallels the changing view of the SAT examination, which has been used for decades as a college admissions criterion. Scoring high on the SAT opened doors to the college or university of one’s choice. What happened, however, was the proliferation of prep classes and tutors that focus only on helping students improve their SAT scores rather than building knowledge. As a result, some students perform at inflated (i.e., artificially high) levels simply to gain a test score without developing a solid skill set to prepare them for college. This is leading some universities to drop the SAT and ACT as an admissions requirement. (However, with MIT reestablishing SAT and ACT, there is likely to be a back-and-forth discussion within higher education on how best to shape the admissions process to predict students’ preparedness and ability to perform.)
In business, e-learning needs to be structured to do more than satisfy momentary needs, with greater emphasis on building competence for the future. This has been a long-standing issue in L&D, as McKinsey observed: “Rather than being regarded as one of the most forward-thinking functions in an organization, leading it through a learning transformation, many feel that their L&D functions struggle to keep up with the needs of their businesses.”
Frankly, it is much easier to satisfy immediate needs, rather than to invest considerable time and effort identifying and developing skills for the future. It is a challenge, given human nature that wants its needs met immediately; however, there a considerable payoff in being future focused, as illustrated by the famous marshmallow test. In this experiment, children were given the opportunity to either have one marshmallow now or wait 15 minutes for two marshmallows. Subjects were followed as they progressed through their lives, which determined that those who could delay their gratification tended to have better life outcomes.
In e-learning, delayed gratification can be found in bypassing the instant “badge” for completing an online course and, instead, pursuing lifelong learning. We’re seeing this happen in industries such as financial services and pharmaceuticals, which recognize that skill development is mission critical. They are being driven by a strong agenda to change old ways and better equip their workforce for the future; unfortunately, they are not the majority.
Credentialing That Matters
There is yet another type of inflation plaguing the workplace: the overstatement or outright exaggeration of a person’s capabilities. In what has been a tight labor market, some candidates have been able to inflate their skills to get a higher paying job and boost their earnings significantly. While someone may be able to give the appearance of possessing skills in the short term, eventually their shortcomings will be exposed when they fail to perform. This is the Peter Principle in action: a person advancing until their role exceeds their capability.
In the past, credentialing — such as earning an MBA or a achieving a designation such as clinical laboratory scientist (CLS) — could attest to the knowledge and skills a person attained. However, the value of certain certifications has been eroded by low-quality, online programs that lack rigor. Companies need to avoid falling for the temptation of merely establishing new, but ultimately meaningless, skills and badges, simply to satisfy instant gratification.
What is needed is a new L&D currency backed by measurable skills that track the evolving needs of the workplace. Instead of eroding in value, these skills would appreciate over time as learning continues. Career paths would involve more than merely job hopping; rather, promotions and job changes would be pursued as gateways to stretch assignments and more learning opportunities. To contribute to workforce development, now and in the future, L&D must be based on proven methods that address these complex challenges.
As pressures mount in a changing business landscape, leaders will need to take a long-term view. Those that do will help ensure their workers continuously develop the necessary skills for the future, while providing a competitive edge for companies willing to make that investment.
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