CEOs believe soft skills will matter more than hard skills in the future

· CEOs in Asia believe soft skills are more important than hard skills for their business in the future, according to The Economist Corporate Network, The Economist Group’s advisory service for senior executives seeking insight into economic and business trends

· Communication of the skills management strategy, getting the right structures for skills development in place and CEOs’ time constraints are the key challenges

· More than 80% of CEOs believe that megatrends affect their companies. Technological progress is seen as the most important trend

· Climate change (23%) and industry convergence (26%) are the trends that are the most often viewed as a threat by CEOs.

The Economist Corporate Network (ECN) has released a new paper, Skills 4.0: How CEOs shape the future of work in Asia, which reveals that the majority of CEOs believe that megatrends matter, but most of the skills required for their business to respond to global megatrends are new skills that they neither appreciate or use today.

The survey*, based on ECN’s more than 500 clients, was conducted across Asia Pacific in September and October 2016, and examines how business leaders in Asia perceive their own strategic role in shaping the future of work and the types of skills needed.

The report states that skills are an essential resource in the knowledge economy of the 21st century. With the unprecedented economic developments in Asia and the dramatic changes rattling through many industries, companies need to ensure they are ready to embrace the disruptions and fend off potential skills gaps and talent shortages. The driving forces behind these changes are a series of global megatrends, including demographic change, climate change, technological progress, urbanisation, globalisation as well as the digitisation of the economy and the convergence of industries. Some are seen as opportunities and others as threats (Charts 1 and 2).

Source: ECN. Extent that company is affected by megatrends.

Source: ECN. Are megatrends a threat or an opportunity?

“Megatrends matter,” said Florian Kohlbacher, Director of the ECN North Asia and author of the report. “Executives are increasingly gearing up to face the challenge of strategically managing the business responses to these megachanges.”

According to the survey, only a small number of CEOs are confident that their company is completely prepared to deal with these trends.

It has also become obvious that the key skills required in the future are soft skills, including problem solving, co-ordinating with others and people management, with 71.9% of the surveyed CEOs believing that soft skills are more important than hard skills for their business (Charts 5 and 6). Hard skills included computer programming and machinery operations. The key challenges that CEOs face when trying to shape the future of work are: communication of the skills management strategy, getting the right structures in place, and time constraints.

The survey findings also show that 90% of CEOs claim to be personally involved in making sure their company has the right skills, however only 4% said that this was not the case. More involvement is seen as crucial. “CEOs will have to reconsider the priorities to make sure their businesses are staying ahead of the curve. Time constraints are obviously a classic conundrum for executives. But given the rising importance of megatrends, megachanges and skill development, it’s about time that CEOs break these time constraints and become more actively involved in these strategically important decisions,” added Kohlbacher.

Managing the business responses to these trends and developing the organisation’s human capital to equip them with the skills needed in this environment is a key challenge for businesses. The skills required are likely to comprise of both soft and hard skills, including people, technological and business skills. While hard skills can be more easily acquired, and often conveyed through in-house training, soft skills are much more difficult to build.

Interested?

Download the report

*The ECN conducted a survey with over 500 clients and contacts across Asia Pacific in September and October 2016. A total of 149 valid responses were used for data analysis. Focus group meetings with a small number of invited CEOs and HR executives were held in Hong Kong, Shanghai, Singapore and Tokyo to discuss the issues in the local context.

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