Welcome to The Skills Economy: The New Talent Paradigm
There is a global skills shortage. In many countries, talent demand hugely outstrips talent supply. Technological developments are augmenting roles at a rapid pace. When it comes to the world of work, the pace of change is as notable as the changes themselves.
87% of companies worldwide report experiencing skill gaps now, or say they expect to within the next five years. In the US, 4 million more job openings exist than available workers – or 1.7 jobs for each jobseeker. Meanwhile, two in three UK firms want to hire people, but eight in 10 of these said finding either skilled or unskilled workers was difficult.
44% of workers’ skills will be disrupted in the next five years. – WEF The Future of Jobs Report 2023
Enter a new talent paradigm: The Skills Economy. Today, skills are what matters – they are the atomic unit of measurement for every aspect of working life.
If you assess people by the job titles they’ve previously had, or the big established companies they’ve worked for, you’ll miss out on talent.
If you make workforce plans based on a static inventory of job titles, once a year, you’ll be unable to pivot when things inevitably change.
If you categorize work through “jobs”, you won’t capture the right skills for each task – the job description as we know it is dead.
84% of business leaders think talent approaches need to reflect a focus on skills rather than traditional job roles. – Navigating The Changing Talent Landscape
In the emerging Skills Economy, the workforce needs to think about developing skills to keep them in high demand… and employers need a totally new way to assess, acquire, develop and redeploy talent.
Enter skills-based transformation
89% of executives say skills are becoming important for the way organizations are defining work, deploying talent, managing careers and valuing employees – Deloitte
In order to stay competitive in the Skills Economy, leaders need to re-orient their organizations around “skills”: How do we get, keep, and grow the skills we need now, and in the future?
In a skills-based organization, leaders make smarter talent decisions, based on deep insights on the skills and potential of (both internal and external) talent. Managers are incentivized to connect their team members with opportunities across the organization.
And employees are empowered to plot their own career journeys and find paths to learning new skills, and freed up to make meaningful connections.
“Just by closing current skills gaps, the global economy would gain at least US$6.5 trillion by 2030 via increased productivity – with wider benefits expected as an upskilled workforce continues to innovate further.” (World Government Summit)
Skills-based transformation rests on three key pillars:
1. Skills Intelligence
Most companies are coming to skills-based transformation “cold” – they don’t have skills data, or what they have is incomplete or out of date. This is a major issue.
To successfully put skills at the heart of every talent decision, you need a single source of truth when it comes to the skills inside the business and in the wider “talent universe” of the company (applicants, candidates, alumni, etc).
By bringing together skills intelligence from across systems, using one common language across the enterprise, maintaining a dynamic Job Architecture based on skills, and applying AI to keep all your data up to date, and as rich, contextual and relevant as possible, businesses get the intelligence they need for faster, better talent-related decisions.
In a skills-based organization, jobs are deconstructed into their underlying tasks. Thanks to the unified skills database, those tasks can then be matched to different individuals’ skills. People can therefore be deployed to the most business critical projects in near real time.
2. Generative AI
Today, technology can not only help you pull together skills data to inform decisions, it can provide recommendations, make hitherto unseen connections, and generate dynamic workforce plans – all of which free you up to do more meaningful, human-centric work.
The technology should operate seamlessly in the background, giving leaders and workers alike an amazing experience at every stage of the talent lifecycle – because insights are delivered in the flow of work.
Generative AI-powered tools should give people the insights they need (for career growth, building excellent teams, or planning for workforce needs) wherever they happen to be working, and such recommendations can be analyzed and audited to reduce bias and inequity.
3. A New Culture
When skills become the new unit of measurement, the workforce becomes a far more fluid entity, plans become more agile, and talent is retrained and redeployed as new needs emerge. This requires leaders to take a less possessive stance in terms of their team members.
The role of the manager changes dramatically: they become coaches and connectors, who focus on employee development for employee resonance, facilitate new connections and encourage intra-departmental networking.
Employees should be able to self-direct their development based on their aspirations, with new technologies enabling their personal and professional growth.
On top of that, people need to be able to trust the HR technology being used. As well as picking a partner that takes a compliant, open approach to the use of AI, businesses need to be ready to educate their workforce on the power of new tech solutions.
The skills economy is already here. It’s time to gather the tools – and skills – you need to thrive in this new paradigm.