Why now is the time for SMBs to grow their people

Small and mid-sized businesses rarely have a talent team, a learning budget, or a large bench. That makes the usual answer to a skills gap, hiring someone new, the most expensive one available. The McKinsey Global Institute research on US workforce transitions points to a better place to look: the people you already employ.

The research estimates that about 11 million US workers may need to move into different occupations by 2035. Automation could reduce labor demand by roughly 36 million jobs, while the AI value chain and the wider economy could create more than 40 million. On net there are more jobs available in 2035 than today. The problem is that the people losing work and the people needed for new work are often not the same people, and the route between them is harder than it looks.

McKinsey sorts those routes into three groups:

• About 14% are direct pathways, where a worker can move with minimal retraining and no wage loss.
• About 41% are winding and need meaningful retraining.
• About 45% are unpaved, with large skill gaps and extensive credentials. In the report's words, "only about one in seven can make the move with no or very limited retraining."

For an SMB, this changes the hiring math. The candidate pool is not full of people who can step into growing roles on day one, because most of them also face winding or unpaved routes. Competing larger employers face the same shortage. The employer that builds the route inside its own walls gets people who already know the customers, the systems, and the way the team works.

There is also a retention angle. The report finds that 57% of growing jobs sit in the top two wage quintiles, while more than 70% of declining jobs sit in the bottom two. Employees in the lowest-paid roles are the most likely to need a transition and the least likely to have a direct path. A front desk coordinator, a warehouse associate, or a customer service rep at your company is probably looking at this picture, even if they have not said so.

Three questions are worth answering this month:

• Which of your roles are most exposed to automation of routine tasks?
• Which roles will you struggle to fill in the next two years?
• Where is the overlap, meaning which current employees already hold a large share of the skills the harder-to-fill role needs?

The rest of this series covers how to build the routes, how to plan for change in every role, which skills to train, and what a first 90 days looks like.