A new year is upon us. What are the wisest business and HR leaders going to be focused on in 2024?
1. Embracing “skills” as a currency 💱
Why are so many companies struggling to find the skills they need to get work done? In large part because “work” is changing rapidly, and thus the skills to do it are also changing rapidly. New skills are being created – and required – faster than ever before.
The World Economic Forum estimates we will need to reskill more than 1 billion people by 2030. Half the skills you had a few years ago are about to become obsolete.
This means we need to look at work, jobs and talent in a new way. Understanding your current workforce? Table stakes. You need to know what you have, what you need, and what is missing – on a skill level, not just a financial level.
The next step is to understand how you are going to get it, and the cost of doing so.
Are you able to see the actual value and cost of those skills? Can you account for the fact that people’s skills change over time? Can you measure and quantify the impact of skilled talent on business outcomes?
If we use the language of skills – the skills needed for elements of a role, and the skills someone has (or could learn) – we create a clearer way to communicate across a given organization. We create an easier way to match up people and opportunities, if those skills insights are managed centrally in the business, and kept up to date. And we create a “currency” for work, which lends itself to flexibility, fairness, and fidelity.
How so? Breaking down jobs into their atomic units – the skills needed to be successful – makes it easier and quicker to find and deploy the relevant people to the critical tasks at hand. Moreover, focusing on skills helps create a system where individuals are evaluated – hired, reskilled, redeployed, promoted – based on their capabilities, rather than other factors (such as previous job titles).
Finally, given the clarity that comes from looking at talent and work through that common, objective, granular lens, organizations that embed skills as an atomic unit of value will be better able to plan for the workforce needed in the future… and to understand talent-related risks.
Using a skills-based approach as your methodology to make talent-related decisions is the future of work – and it should be top of the agenda for 2024.
2. Appointing a “chief skills officer” 📋
Skills-based transformation may, in fact, already be on your agenda. Skills-first hiring, skills-based everything, skills at the center of every talent-related conversation… it is certainly everywhere. Your role, your pay, your development – all of this will soon be determined by what you can do, and your potential.
It is so wholesale that it’s created an interesting problem. It is not entirely clear who owns skills-based transformation (which, by the way, is about embedding a continuous capability in your organization to change as the world changes – not a project you hire a consulting firm to do every three years.)
Is it the CHRO? Despite how technical (and reliant on a new data infrastructure) it is? Should the CTO lead the charge? Even though a deep understanding of people is at the core? Should the CEO be on the hook, given how many CEOs are noticing that every huge business decision is ultimately a decision about the skills you have and need to make the leap?
It’s clear that skills intelligence will power the organization of tomorrow. To take just one example, if you want to pivot into a new market and find 10,000 new Wealth Managers in Japan, it would be handy to know that there are only 4,000 people in the whole country with the requisite skills in wealth management.
As a result, many will look to the Chief Digital Officer (if they have one), given their remit around large-scale digital transformations. In truth, a combination of CFO, CIO and CHRO, led by the CEO, will probably be responsible for embedding this new way of working. It is, after all, the most critical ingredient to your business strategy – the ability to get the right skills in the right places at the right time.
What companies need to reckon with is not only the scale of the data and technology challenge, but the scale of the cultural transformation. It may not be a “CSO” – but you need someone senior enough to enact change, with budget authority, who can drive cross-functional programs and deliver results across the business. We recommend making sure this role is clearly defined, as soon as possible – and empowered to succeed.
3. Rethinking “skills-based pilots” 🤔
Relatedly, I think 2024 will see more companies realize that skills-based approaches are not only important, and require a concerted effort, but also that they cannot really happen in little pockets throughout the company.
We know from the clients we speak to that pilots don’t work when it comes to the “skills-based everything” approach. Why? They fail because they don’t get the technical resources and the change management processes to make them successful.
If making better talent decisions rests on better skills intelligence, then better skills intelligence rests on having the most comprehensive data set possible, and connected HR platforms.
What good is it to understand your candidates, if not also the wider pool of potential candidates? What good is having a Talent CRM, if it doesn’t speak to your ATS? Are you considering the skills and potential of your existing employees? Does every job in your organization find its place in your Job Architecture? And are you weaving in the pulse of the wider labor market, particularly your competitor set?
Hiring, redeploying and upskilling talent, to meet the demands of technological innovation and growing skills gaps, means knowing what you have, what you could have, what’s out there, what you need – and what you don’t need. That understanding is only truly possible if you can place every candidate and role into the context of your business and industry.
As Stefan Begall, Group Head of Talent at Telia Company, said on our Talent Blueprint podcast: “Once we have an overview of our entire workforce, instead of just a portion of it, we will be able to make a lot better informed decisions.” And as Ash Walvoord, Head of Talent Management at Verizon, told us, “Technology really makes it possible to boil the ocean.”
Rather than “pilots”, you may need “focal” initiatives on specific areas. For example, if you are an automotive manufacturer and you know you need to have software and AI skillsets in order to build the cars of the future – you need integrated, organization-wide insights, and labor market data, in order to work out where you build, buy or borrow those skills.
That isn’t a pilot; it is about creating a competitive differentiator that will underpin your entire business strategy.
4. Tackling the AI “black market” head on 🛠️
Remember the “consumerization of IT”? When people would use consumer-grade technology like Slack and Dropbox in a professional setting – because it worked better? And then IT departments would play catchup with the “black market”...?
The same thing is happening today with AI tools: your people are already using them. (If you think your engineering teams aren’t already using Github Co-pilot– think again.) Now it is a question of how to make sure they are used correctly, and to their full potential.
44% of Talent Index respondents said that they had noticed an increase in the use of AI technology in their organizations – but just 15% said they were using AI “provided by their employer” within their role.
If you are worried about how AI changes your business, remember your staff are even more worried about how it changes their jobs, or if their jobs will exist at all. The right strategy here is to do it “with people” not “to people”. The best examples are CEOs that sit down with their stakeholders to make this change happen together, listen and learn, and make it collaborative.
The change has already happened – AI is here. It is being used. The transition to a new way of working powered by AI is what takes time. How you manage that transition period is what will make all the difference.
One last point: technology doesn’t change jobs, companies do.
5. Adopting more “human-centric management” 🧑🏿🤝🧑🏼
Once you accept AI, you can let it live where it needs to live – in the background. For all the excitement about intelligence of the artificial kind, 2024 will really be the year of humans. We will see that embracing AI-powered tools doesn’t mean relegating the role of the people leader – quite the opposite.
“Human-centric leadership” (a la Mercer) means viewing technology as “an enabler of human achievement.” Generative AI-powered tools create efficiencies, and bring us insights we couldn’t have easily accessed before. This opens up the possibility for greater human connection.
Managers will be freed up to build stronger relationships with team members, for example, and help them explore useful connections within the wider business.
Now we are able to finally give managers the tools they need to be better, more consistent, and more human. We no longer only manage by objective. People are not a fixed asset. They don't depreciate – they appreciate. In 2024, we need a model of management that allows us to invest in appreciating assets.
Managers are now investors in people; in your human capital balance sheet. They need the tools to be able to do this well.
6. Seeing L&D as central to closing skills gaps 📚
Skills gaps are growing. Those gaps can’t be closed via external recruitment alone. Training and L&D will be a huge topic in 2024. It will also become a more solid pillar of your retention strategy.
The days of only hiring for what you need are gone – this approach won’t work in the new world, where skills are scarce, highly sought after, and don’t tend to exist in quantities you need. And, often, they take far too long to find and hire, and become prohibitively expensive.
Investing in skills development and training – and balancing your “buy” vs “build” considerations correctly – will ensure you have the right skills in place faster, and also often much more cheaply. What's really important is to have a good understanding of skills you have, skills you need, the gaps, and the best path to fill those gaps. In many cases it is not hiring externally.
There’s also the retention aspect. Our recent survey of workers found that nearly a third of those currently looking for a new job are doing so due to a “lack of opportunities for growth and progression” (32%).
Nearly half of respondents (46%) told us they are keen to pursue learning opportunities at their workplace. But just 26% said they are currently doing this.
It’s clear that better training, relevant mentors, and opening up more internal mobility options could help you hold on to top performers, while helping you fill skills gaps effectively and efficiently.
Why not use the new year to upskill staff, and achieve the greatest win/win in business?
7. Taking your “talent risk” seriously 📉
In the same way companies are required to report on financial capital risk, increasingly boards and CEOs are starting to look at talent risk. Wouldn’t you think it might be important to shareholders that you are unlikely to hit your goals because you don’t have the skills you need? Or that your critical people will leave soon… and you don’t have a backup plan? Thought so.
Today, most companies cannot measure their talent risk, so they can’t disclose it. While they might know down to the last coffee bean how much risk is in their supply chain, they can’t see that there are not enough customer service agents in the pipeline to handle increasing demand, or that key employees hold specialized knowledge that hasn’t been adequately documented, or passed to those who need upskilling.
Without a comprehensive understanding of talent risk, organizations may find themselves jeopardizing their long-term success. It’s time for businesses to prioritize the quantification and disclosure of talent risk, just as they do with financial capital risk, to ensure a more robust and informed decision-making process that aligns with the interests of shareholders and the ensures the sustainability of the company.
This is where skills as a unit of measurement comes in. Becoming a skills-based organization is a fundamental building block to creating both clarity (around what you have and are missing, when it comes to talent) and actionability – getting the right job adverts into the market, connecting people to upskilling or reskilling opportunities, or moving skilled workers where you most need them at this moment.
The skills-based organization of tomorrow will understand their talent risk, and be able to mitigate the biggest blockers of success while pushing on the levers of success: that is, getting critical talent in critical roles at the right time.