PwC BHEF Reskilling Pre Publication Discussion Draft 6.20.19

Internal Discussion Draft Not for Distribution or Quotation ©BHEF 2019 Reskilling: A solution for the digital skills-gap A PwC-BHEF White Paper This paper lays out the challenges and opportunities around reskilling—equipping current employees with new skills. We believe this strategy can help solve the disconnect between the supply of talent and the demand for digital skills, while increasing diversity in the digital workforce. As a launchpad for further discussion, engagement, and impact, we are pleased to share trends and PwC’s experiences launching its own digital reskilling strategy. Leave No Worker Behind? Employers are scrambling to find the talent needed to keep up with technological change. Although some jobs are being eliminated by the Digital Revolution, new ones are also being created—and all too often, not enough people have the skills to fill these positions. For example, 31% of executives in PwC’s most recent CEO survey worried about meeting the demand for AI skills over the next five years. 1 Beyond AI, 54% of the CEOs surveyed pointed to a lack of analytical talent keeping executives from getting the information they need from the troves of data they possess, and 55% reported being unable to innovate effectively due to the skills gap 2 . Automation is everywhere, and while it delivers many benefits, it has also created understandably deep concern about the future of our workforce. As robotics, artificial intelligence, blockchain, and other seismic innovations continue to evolve and take hold in our economy, these transformational technologies will create, eliminate, and change many jobs. For many employees, acquiring a digital skillset and adapting those skills to changing times will be a prerequisite for continued employment and professional success. But determining which skills will be relevant and then gaining those skills while holding down a job is far from easy. Significantly, reskilling is the globally preferred method (selected by 46% of CEOs surveyed) for closing the skills gap. That number is somewhat lower for U.S. executives (31%). 3 For their part, employees also stand ready. Three quarters of the 10,000 respondents to PwC’s Workforce of the Future Survey said they were prepared to learn new skills or completely retrain to remain employable. 4 The preference for reskilling makes sense: In many instances, outside talent may be too scarce or costly. Moreover, reskilling existing employees creates meaningful benefits for the organization as a 1 PwC, 2019 AI Predictions, https://www.pwc.com/us/en/services/consulting/library/artificial-intelligence-predictions- 2019.html#section2. 2 PwC, 22 nd CEO Survey: CEO’s curbed confidence spells caution, https://www.pwc.com/us/en/library/ceo-agenda/ceo- survey.html. 3 PwC, 22 nd CEO Survey: CEO’s curbed confidence spells caution, https://www.pwc.com/us/en/library/ceo-agenda/ceo- survey.html. 4 PwC, Workforce of the future: The competing forces shaping 2030, https://www.pwc.com/gx/en/services/people- organisation/publications/workforce-of-the-future.html. Internal Discussion Draft Not for Distribution or Quotation ©BHEF 2019 whole: employees gain the security of knowing that, so long as they opt in to reskilling opportunities, they will not be left behind. Employers appreciate retaining their own people, while strengthening and developing their contributions to the company. Increased loyalty and engagement are morale boosters, and both the organization and its people grow from an increasingly innovative culture. And reskilling can create a virtuous cycle. Data from the OECD’s recently released skills outlook, “Thriving in a Digital World,” shows that workers in digital environments may learn faster, communicate better, and perform a greater variety of tasks. 5 This, in turn, makes these employees more likely to pick up new tools and methods during their careers. Increasingly, early adoption of new technologies is table stakes for gaining a competitive advantage. Companies that prioritize digital reskilling and create a growth mindset culture can optimize their technological edge. Indeed, organizations that deploy reskilling to fuel ground-up innovation are likely to find—as PwC has (discussed below)—that the people who deal with issues and processes daily are ideally positioned to improve upon them, once provided the time and skills to do so. Learn, Adapt, Combine, Repeat One of the challenges employers, educators, and workers face is planning today for the skills that will be in high demand tomorrow. In addition to acquiring concrete digital skills, employees who bring a long-term commitment to learning, growth, and agility will benefit as technology continues to change the way we work. As stated in the OECD’s “Thriving in a Digital World” report, “This readiness to learn new things may be one of the most important skills to develop in a rapidly changing working environment.” 6 Additionally, workers who can combine skills likely have an advantage in the digital economy. In a recent study with Burning Glass, BHEF identified three core groups of “New Foundational Skills of the Digital Economy,” 7 based on analysis of millions of resumes and job postings:  Human skills (social, creative, and critical intelligence, including analytical skills, collaboration, and relationship building),  Digital building block skills (including data analysis and management, software development, computer programming, and digital security and privacy),  Business enabler skills (including project management, business process, communicating data, and digital design). 5 OECD, OECD Skills Outlook 2019: Thriving In a Digital World, https://www.oecd-ilibrary.org/sites/df80bc12- en/1/2/2/index.html?itemId=/content/publication/df80bc12- en&_csp_=53a91137adce4a3a859955ebb548509c&itemIGO=oecd&itemContentType=book. 6 OECD, OECD Skills Outlook 2019: Thriving In a Digital World, https://www.oecd-ilibrary.org/sites/df80bc12- en/1/2/2/index.html?itemId=/content/publication/df80bc12- en&_csp_=53a91137adce4a3a859955ebb548509c&itemIGO=oecd&itemContentType=book. 7 BHEF, The New Foundational Skills of the Digital Economy: Developing the Professionals of the Future, http://www.bhef.com/publications/new-foundational-skills-digital-economy-developing-professionals-future. Internal Discussion Draft Not for Distribution or Quotation ©BHEF 2019 Professionals with one of these foundational skills command higher salaries, and those who combine skills from each of the three core groups are at an even greater advantage. Reskilling toward Diversity and Inclusion The increased demand for digital skills presents a challenge and an opportunity for companies seeking to improve diversity and inclusion. The under-representation of women and many minorities in technology is well documented. Engineering graduates constitute an important source of talent in many sectors, including financial services. Consider that in 2017, only 25.7% of engineering master’s degrees were awarded to women, a small increase from 22.4% in 2008. The numbers for under-represented minorities in these fields are also stark: 75.2% of engineering master’s degrees were earned by whites or Asian-Americans, with Hispanics accounting for 8.5% and Blacks or African Americans earning 4.7%. 8 This means that for many organizations, the new talent pipeline could continue to be dominated by groups that are already well-represented in tech. But given the growing demand for and short supply of digitally savvy talent, companies have an opportunity to create a more diverse workforce by looking beyond their usual recruitment pools. For example, more undergraduates are enrolled in STEM fields at four-year minority-serving institutions than at other four-year institutions. 9 Educators also have the opportunity—and responsibility—to foster greater diversity in STEM fields. In a previous joint report, Investing in America’s Data Science and Analytics Talent, PwC and BHEF documented the emergence of the hybrid economy, characterized by increasingly digitally-intensive organizations across all sectors. Honing in on data science and analytics, we identified several tools for increasing diversity, including training and support for faculty, creating engaging introductory courses to make computer science courses more attractive to more students, and designing curricula for practical use. 10 These strategies can be applied beyond data science to broaden and diversity the talent pool in other STEM fields. It is important, however, to look beyond STEM to meet the growing demand for digital skills. Providing digital credentials to higher education students from a broad array of disciplines can expand opportunities for non-STEM majors and grow the talent pipeline for employers that need 8 Brian L. Yoder, American Society for Engineering Education, Engineering by the Numbers. https://www.asee.org/documents/papers-and-publications/publications/college-profiles/2017-Engineering-by- Numbers-Engineering-Statistics.pdf. 9 The National Academies of Sciences, Engineering, Medicine, Minority Serving Institutions: American’s Underutilized Resource for Strengthening the STEM Workforce, https://www.nap.edu/catalog/25257/minority-serving-institutions-americas- underutilized-resource-for-strengthening-the-stem. 10 BHEF and PwC, Investing in America’s data science and analytics talent: The case for action (2017), https://www.pwc.com/us/dsa-skills. Internal Discussion Draft Not for Distribution or Quotation ©BHEF 2019 non-tech generalists with certain digital competencies. Working with universities, BHEF partners are charting a path forward on this front by designing and deploying new digital credentials. 11 Similar opportunities exist for reskilling an existing workforce. As they lay the groundwork for new reskilling initiatives, business leaders can ensure that diversity and inclusion are central. This means creating time and incentives for all workers to build their skills, and providing paths forward for employees with varying backgrounds, levels of expertise, and digital knowledge. Additionally, as BHEF’s foundational skills groups make clear, reskilling goes far beyond pure technological skills. Inclusive leadership skills and the ability to collaborate and innovate with a wide range of colleagues are critical to future individual and organizational success. Digital fitness: A case study of PwC’s reskilling experience Although reskilling initiatives should be tailored to organizational needs, PwC’s approach provides a useful look at how reskilling works in practice. PwC’s approach is holistic: the firm commits to leaving no employee behind, but also empowers its people to opt in to this commitment by taking responsibility for their own digital fitness. As a recent Harvard Business Review article emphasized, in-house digital skill building at PwC is “fundamentally about culture and people experience—and bringing to life a shared growth mindset among individuals and teams, and across the entire organization.” 12 PwC’s strategy has three pillars. The first is an inclusive foundation of digital acumen for all employees, which is also personalized through a variety of learning channels. For example, PwC created a proprietary app that customizes learning through an assessment and learning paths for each user. Second, PwC established fast track programs, including digital academies and a Digital Accelerator role for selected employees. The third pillar focuses on driving innovation with speed at scale by integrating both business-led initiatives and citizen-led crowdsourcing through the PwC Lab platform. Available to All and Tailored to Each: Digital Fitness App PwC’s Digital Fitness app assesses each employee’s digital acumen and then customizes a learning path that includes podcasts, gamification, skill building, and quizzes to enable all employees to increase their digital fitness. Training spans multiple domains, including data analytics, AI, blockchain, and design thinking. At the same time, the app generates important information about planning and skill development, allowing PwC to hone its strategies going forward. Other channels include podcasts, gamified learning, and access to all learning assets and courses in a single “digital hub.” The reskilling strategy includes a “blockchain” of verified skills as employees earn digital badges. 11 Isabel Cardenas-Navia and Brian K. Fitzgerald, The digital dilemma: Winning and losing strategies in the digital talent race, https://journals.sagepub.com/doi/abs/10.1177/0950422219836669. See also BHEF, Creating Purposeful Partnerships, http://www.bhef.com/publications/creating-purposeful-partnerships. 12 Mike Fenlon and Sarah McEneaney, How We Teach Digital Skills at PwC (Harvard Business Review, 2018) https://hbr.org/2018/10/how-we-teach-digital-skills-at-pwc. Internal Discussion Draft Not for Distribution or Quotation ©BHEF 2019 Hitting the Digital Gas: The Digital Accelerator Program In addition to ensuring that everyone has digital reskilling opportunities, PwC fast-tracks digital development for a select group. Those who are selected for the Accelerator Program (roughly 1,200 spaces in the past year, and growing) dive deeply and rapidly into specialized reskilling, including data analytics, visualization, automation, AI, and digital storytelling. Accelerators obtain dedicated time for skill development, while still serving clients and applying their new skills. They also receive advanced digital knowledge and skill badges as they progressively acquire new expertise. Scaling Change by Innovating from the Bottom and the Top A crucial component of PwC’s approach is the combination of top-down and bottom-up innovation, which drives change rapidly at scale. At the top, leadership sets the direction and drives initiatives, defines outcomes, and gives people the time, tools, and incentives to engage in on-the-job innovation. “Citizen-led” change is catalyzed by platforms, such as the PwC Digital Lab, a collaborative solutions platform and a social community that allows employees across the firm to crowdsource ideas and solutions, scale innovations, propose modifications, and apply their skills. Next steps We live in a world where talent scarcity is hindering innovation and growth, and where the threat of job losses due to automation is causing fear and uncertainty. PwC and BHEF believe digital reskilling can be an important part of the solution to both problems. In the coming months, we plan to continue research and explore opportunities for engagement, and action by businesses, educators, researchers, and policymakers to create a digitally fit workforce. Our recommendations include: Assess the supply-demand challenge for digitally skilled talent by identifying:  Workforce trends and pathways to higher skilled jobs;  Reskilling strategies that create inclusive, high performing digital environments and enable rapid innovation at scale;  Partnerships with education and training providers to align skills and accelerate skill acquisition;  New digital learning credentials. Investigate the steps businesses can take to:  Include diversity and inclusion strategy as part of reskilling;  Make digital up-skilling a business and people priority;  Ensure that the right investments, assets, and processes are in place to promote technology- enabled learning;  Build an inclusive personal growth mindset culture; Internal Discussion Draft Not for Distribution or Quotation ©BHEF 2019  Exploit adjacencies in roles and skills, and bridge generations to tap potential and skills. Invest in diversity and inclusion in reskilling as a top business and societal priority:  Build the pipeline of talent through reskilling;  Realize the full potential of a workforce by raising awareness, education, and redesigning talent processes to address unconscious biases;  Fast track strategies for attracting and retaining diverse talent for a digital innovation economy. Demonstrate how education and training partners can:  Align learning across all disciplines with foundational digital skills demands. This includes analyzing workforce demand to understand which jobs and skills will be most critical to the digital economy.  Build more flexible and responsive learning and skill acquisition models.  Focus on technology-assisted learning modules with new credentials to reduce cost.