More than 40% of UK firms believe a skills shortage represents a significant threat to their competitive edge

More than four in 10 UK firms believe that a skills shortage represents a significant threat to their business, new research indicates.

A survey of more than 560 businesses commissioned by Barclays Commercial Bank found that nearly one-third of respondents believe new talent and skills would have the biggest impact on their competitive edge going forward.

The need for talent and skills beat off the need for business expansion via merger/acquisition (27%), additional cash flow (21%), and trading overseas (13%).

The survey also found that people strategy is the most difficult part of a business plan to get right for 79% of respondents, ahead of marketing and sales, financial forecasts, risk management and environmental and corporate responsibility policy.

And firms have already begun to react to a possible skills shortage, as 42% of businesses have already invested more in recruitment and employee development over the last 12 months.

Alexander Baldock, commercial director at Barclays, said: “It’s revealing that people-related issues such as the skills gap, retention and succession planning are seen by businesses as the hardest thing to get right when planning for the future. Business leaders have been talking for some time about ‘the war for talent’ and this research shows just how tough it is to develop a successful people strategy.

“However, despite clear thinking about the impact these issues may have on a business, it’s not always translating into solid, strategic action. For example, four in 10 businesses have not given thought to a comprehensive succession plan for their managing director or CEO, and this could cause major disruption in the case of a sudden departure,” he added.

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