Companies take a ‘grow your own’ approach to digital talent
We’ll send you a myFT Daily Digest email rounding up the latest Technology news every morning.
Imagine it only took 40 seconds to buy lunch. This is happening at some Marks and Spencer stores in London. The retailer has been rolling out a checkout-free service, initially in six stores. Shoppers use a phone app to scan and pay for items, then leave without queueing at the till.
The concept is part of a wide-ranging transformation plan by the UK retailer to future-proof its business. The idea is not new, Marks and Spencer is following the lead of ecommerce giant Amazon, which opened the world’s first checkout-free supermarket this year in Seattle. Traditional companies such as Marks and Spencer, which traces its heritage back to a “penny bazaar” stall in 1884, are under pressure to redesign their businesses to compete with new digital rivals.
Finding staff with the technical knowhow for such a transformation can be difficult, especially as the European workforce ages and technology companies grab the best graduates with digital skills. Data from employment website Glassdoor, analysed by venture capital group Atomico, showed the median annual salary for software engineers in London was $54,800 in November last year. In Berlin the figure was $59,700. The pay offered by big tech companies was much higher, however, with Facebook offering average pay of $80,000 in London and Google’s average UK salary at more than $76,000.
Simmone Haywood, head of talent at Marks and Spencer, says this was a factor behind the retailer’s decision to launch a retraining programme to teach staff about machine learning and coding languages such as R and Python. “We have a lot of data at M&S, but we have a lot more we can do to derive insights with that data,” she says. “There is a real understanding that the retail landscape is changing, so there is a desire to anticipate future needs. We recognised that reskilling workers was one of the main goals [for] becoming digital-first.”
The programme, which was launched this year, will put between 35 and 150 Marks and Spencer employees through 18 months of training with Decoded, a technology business that has worked with institutions such as the UK’s Ministry of Defence and companies such as Google’s research unit DeepMind.
The scheme will be structured like an apprenticeship, with workers spending a fifth of their time away from their day-to-day roles studying coding and other digital skills with the retailer’s data. Marks and Spencer is funding the programme in part through the UK government’s apprenticeship levy, which helps companies fund workplace training for staff.
Among other companies to have launched retraining programmes to boost digital skills is AT&T, the US telecoms group. It announced one of the most ambitious programmes last year, with plans to retrain its more than 250,000 workers in tech skills through partnerships with multiple universities and online platforms.
Another US company, retailer Walmart has set up “academies” to train customer service managers and online grocery pick-up staff. Meanwhile, German software company SAP has launched a series of boot camps and peer coaching to teach digital skills.
The efficacy of these programmes has yet to be demonstrated, however. “For now, these [schemes] are exceptions,” says Susan Lund, a leader of the McKinsey Global Institute, the consultancy’s research arm. “The human resources (HR) challenge in all this is considerable. Budgets for talent will go up, potentially steeply.
“As workflows and business processes are transformed by artificial intelligence, it is not just workers but HR itself that will need to change and acquire new skills.”
She adds that retraining is inevitable as automation renders existing skills obsolete. McKinsey has forecast a dramatic increase in demand for digital skills over the next decade, estimating that by 2030, the time workers spend using advanced technological skills will increase by half in the US and by 41 per cent in Europe.
The consultancy has predicted a decline in demand for workers such as accountants, record-keepers, meter-readers, cashiers and shelf-stackers, while demand for workers with technological, social and emotional skills will rise.
Current vocational training programmes, however — which account for the education of just under half of the EU’s upper-secondary students — are not equipping people with the right technology skills, according to Cedefop, the European Centre for the Development of Vocational Training, an EU agency. This makes work-based tech training ever more crucial.
According to Nobel prize-winning economist Joseph Stiglitz, the changes could contribute to political unrest if not managed well: “There’s obviously a lot of anxiety about work in all the advanced countries,” he said in a speech at the Royal Society, a UK-scientific academy, this September.
“It’s not just about jobs, not just about wages and the increasing polarisation of the labour force. It’s about inequality and about what would society be without work.” Failure to manage change, he said, would fuel “not only the nativism that we are experiencing on both sides of the Atlantic but it could well feed a new era of fascism”.
French supermarket group Carrefour, the world’s second-largest retailer, signed a deal with Google in June to open up new ways of reaching online customers. As part of the deal, Google will train 1,000 Carrefour employees in new technologies — a move that came after Carrefour announced it would make heavy lay-offs as part of a strategic plan that includes an increase in digital investments.
Studies have shown, however, that the benefits of in-house training might not be shared out equally. An analysis of the European Sustainable Workforce Survey — an EU-funded project — carried out in nine countries, showed that older employees were much less likely to participate in workplace training than younger staff. The research also showed female employees were often excluded from training, with older women more often paying for education themselves.
“It’s clear that those in the organisation — especially the middle managers — have a huge impact on the access workers have to workplace training,” says Jelle Lössbroek, a researcher at Utrecht university who carried out the analysis. He is currently working on a study of digital training programmes: “Technological change will be one of the major trends, as will be the ageing of the labour market. I’ll be interested to see how they combine.”
For businesses, the biggest challenge is proving the financial benefits of these programmes, especially if staff take their new-found skills to higher-paying jobs elsewhere. The risk of this has led some business leaders to argue that workplace training should be funded by governments, because the ultimate benefit is reaped by society as a whole.
Marks and Spencer hopes to see the benefits over time, with ideas such as checkout-free stores. “We’ll start to see things happen more quickly,” Haywood says. “Those are the things we’ll use to measure the success of this programme.”
The Financial Times features 100 European companies, individuals and organisations that are using technology to change their businesses and tackle social challenges
With support from Google