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AI exploded into the public consciousness with ChatGPT’s release just over a year ago, sending employers scrambling to prepare their talent for the next tech boom. Companies quickly focused on skills-based strategizing to recruit and develop employees, rather than relying on pedigree. But that’s “easier said than done,” according to Megan Smith, SAP’s head of human resources for North America.
“What companies right now are trying to do is figure out where they fall on the spectrum of being a skills-based organization,” says Smith. “If you are used to a certain set of criteria and a certain job definition as how you hire for roles, it is quite a long shot to say you’ve gone truly skills-based, where everything is about identified skills for positions.”
Most organizations have so far failed to use a skills-based approach to fill their job vacancies with current workers, according to HR consulting firm Mercer’s 2023/2024 skills snapshot survey. Around 47% of HR leaders polled say they have identified skills needed for specific jobs, but only 28% have mapped those skills to individual employees. And around 45% of HR leaders polled say they have a skills library that they use for at least part of their organization, but, two-thirds of respondents are assessing their entire workforce based on a single broad skills catalog without a more thoughtful consideration about what their company needs and how to get there.
One primary barrier preventing employers from developing a robust skills-based talent strategy is their insistence on boiling down skills to keywords on a resume instead of viewing them as measurable attributes, says Tigran Sloyan, founder and CEO of CodeSignal, an interview and assessment platform for tech talent.
“Without that clarity around who knows what and at what level of competency, you’re just shooting in the dark and hoping to make sense of the chaos,” says Sloyan.
That bodes ill for the way that most companies are doing business right now. Around 69% of employers rely on workers self-reporting skills for assessments, while 12% don’t have any formal skills assessment in place at all, according to the Mercer survey.
For companies that do go above and beyond looking to measure employee skills, they often have potential hires complete assessment tests, but the process is time-consuming and sometimes criticized as a form of unpaid labor. Sloyan expects that in the next five to 10 years, more skill platforms will emerge—these would create standardized definitions around skills competencies and development, thus helping create cohesion between employers, higher education institutions, and learning and development organizations.
“That unification will take time. But right now, these ideas all live in different organizations,” says Sloyan. “You have to bring those parties together so we have a shared approach to discussing, discovering, and developing those skills.”
Some companies are already using AI to help map skills to workers’ career development. Software provider ServiceNow is currently piloting one such program and plans to roll out an employee hub connected to the 13,000 skills the company mapped internally next year. AI machine learning will then predict what class or training an employee needs to complete to gain necessary skills.
“We’re thinking about how organizations like ourselves cannot just recruit for degrees and schools or traditional paths,” says Jacqui Canney, ServiceNow’s chief people officer. “But if we know the skills that we want and need, how do we use AI to go find the people with those skills, and then pull them into the company, and [do] the same for the people inside our company?”
Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion
Reporter's Notebook
The most compelling data, quotes, and insights from the field.
Older Americans’ presence in the workforce is growing. Around one-fifth of Americans ages 65 and older were employed in 2023, almost doubling the share of senior Americans who were employed 35 years ago, according to the Pew Research Center. Around 62% of these older workers are employed full-time, up from 47% in 1987, and 44% hold a bachelor’s degree compared to 18% in the past.
Around the Table
A round-up of the most important HR headlines.
- White people from rich families currently hold half of all senior finance positions in the U.K. and are hired more and promoted faster than those from poorer backgrounds, according to a new report from Progress Together, a taskforce promoting socio-economic diversity in the U.K.’s financial services sector. Bloomberg
- U.S. employers offered average annual wages of $79,150 to new hires in November, a near $10,000 increase from July, according to the New York Federal Reserve. Reuters
- Video game studio Activision Blizzard will pay $54 million to settle a lawsuit from female employees alleging they were paid less than men and denied career advancement opportunities while at the company. Wall Street Journal
Watercooler
Everything you need to know from Fortune.
Scrooged. Thirty-four percent of companies surveyed by Challenger, Gray & Christmas won’t give out year-end bonuses to employees this year, up from 27% in 2022. —Trey Williams
Pros and cons. The CEO of Netherlands-based food retailer Ahold Delhaize claims the company saves more money replacing staff with self-checkout machines than it loses through shoplifting. —Phil Wahba
Office annoyance. Employees who film TikToks at work, vaping indoors, and staying online past working hours were some of the biggest office pet peeves this year, according to a survey from printing company DigitalID. —Orianna Rosa Royle
Happy at home. OLIPOP CEO Ben Goodwin tells Fortune the soda-alternative company’s fully-remote model is attributable partly to its high employee satisfaction rates. —Jane Thier
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