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Cracking the Job Code

It may seem counterintuitive for employers to double down on learning and development at a time when workers are becoming more mobile. But recent research across four leading economies suggests that such a strategy is more important than ever.

LONDON – It has always been difficult to know with certainty that someone will be a good fit for a job until she or he is in the role and actually doing the work. For that reason, the hiring process can require both candidates and employers to take a leap of faith – which is especially true today, when labor shortages and fast-changing technologies are making traditional hiring practices even less effective. Firms need a new lens for evaluating talent – and must step up their commitment to developing skills through on-the-job coaching.

Businesses should start by better understanding how workers move between jobs and what that process means for them. In recent research, the McKinsey Global Institute examined millions of de-identified work histories, as well as job postings, across four major economies – the United States, Germany, the United Kingdom, and India – to see how people accumulate skills over the course of their careers. The study found that skills and improved job matches acquired through work experience are linked to almost half of the average person’s lifetime earnings. That share is typically much higher for people without college degrees who start in low-paid jobs.

For example, professional experience contributes more than 90% of lifetime earnings for Indian workers who begin their careers as construction equipment operators, but less than 30% for the country’s health-care professionals, whose lifetime earnings are primarily determined by their education. For people who start out in low-wage jobs, making strategic career moves and learning along the way is the best – and often the only – route to higher earnings over time.