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Organizations are trying to restructure their workforce on the fly, breaking down jobs into collections of skills and redeploying talent rapidly as automation and AI take over tasks once performed by people.
All of this follows a several year push towards a skills-based workforce. Companies bragged about dropping degree requirements, instead focusing on capabilities and promising more dynamic career paths.
It all sounded great. At least on paper.
But the celebration revealed an uncomfortable truth: Most organizations don’t actually know what skills their employees have.
That’s a problem.
The frequent layoffs and reorgs at the enterprise level require scalable solutions to identify needed skills and the people who have them. And while we've been talking about skills-based hiring and workforces for awhile, we don’t seem anywhere closer to an answer.
The Big, Skills-Based Blind Spot
Executives and HR leaders love talking about skills. They throw around terms like upskilling, reskilling and internal mobility like they’re solving the problem. But when it comes to actually tracking and understanding employee skills, things get murky fast.
Consider this: 87% of executives admit they have skill gaps in their workforce. Yet, most don’t have the data to pinpoint where those gaps are. And employees feel it.
One-third of workers say their company doesn’t recognize or fully utilize their skills. That’s a staggering amount of talent left on the table.
But the issue isn’t just awareness. It’s also infrastructure.
Aptitude Research found that 39% of organizations admit they need an effective way to assess skills. So, nearly half of companies don’t even have the mechanisms to evaluate what their people can do. And readiness? Only 24% of executives say they feel “very ready” to implement a skills-based workforce. That’s not exactly a ringing endorsement of progress.
To make matters worse, skills tracking is wildly inconsistent. Different departments often define and measure skills in different ways, creating a fragmented, unreliable database. The result is a supposed “skills-based” organization that lacks a single, accurate view of workforce capabilities.
The consequences of this go beyond frustration. Only 34% of employees feel their company actively supports their skill development. That means organizations aren’t just struggling to track skills; they’re also failing to nurture new ones.
Bottom line? Companies talk a big game about being skills-based but without a clear and evolving picture of workforce capabilities, they’re just making it up as they go.
The Risk of Building Without a Foundation
A skills-based approach only works if it’s grounded in reality. Without an accurate skills inventory, organizations are forced to make critical talent decisions based on gut feelings rather than hard data.
Take learning and development for example. Companies pour millions into training programs, but if they don’t know what employees actually need, those investments miss the mark. Employees, meanwhile, don’t feel supported because their growth isn’t aligned with actual business priorities.
The same is true with internal mobility. The promise of a skills-based workforce is that employees can move fluidly between roles based on their abilities. However, few companies accurately and effectively track internal skills. Without that visibility, career paths stall, talent is underutilized and engagement suffers.
Even hiring remains stuck in old habits. A study showed that 81% of employers claim to prioritize skills over degrees in hiring, yet the results don't back that up. In spite of a fourfold increase in jobs that dropped degree requirements, it has only led to a 0.14% increase in hires without degrees.
That’s the reality: Without the right infrastructure, companies fall back on outdated hiring and workforce management practices, no matter how much they talk about change.
Our Approach to Skills Needs to Evolve (Like Our People)
One of the biggest challenges with the skills-based approach is that even if a company maps its workforce’s skills today, those skills won’t stay static. While you might be able to track what people are doing in your training and development programs, it leaves an incomplete picture. Employees evolve and gain new expertise in ways that often go unnoticed.
Take Sarah, a coffee chain frontline worker who’s finishing an online data analytics degree at night. She’s building a skill set that could reshape her career at her organization, but no one’s tracking it. Or Mark, a software engineer at a large tech company running a small e-commerce business on the side that sharpens his financial and strategic thinking in ways his job title doesn’t reflect. Then there’s Lisa, a customer service rep at a call center who steps up to manage a team through a stretch project, developing leadership skills that aren’t captured in any internal system.
Traditional skills assessments and inventories miss these shifts. While smaller organizations, engaged managers and sheer luck can help uncover them, there aren’t many ways to scale that in a large enterprise.
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Can AI help? Perhaps. And because employees are desperate for employers to recognize their skills, more than half (53%) say they’d support AI-driven skills tracking if it actually helps them grow.
Employees might be skeptical of AI taking their jobs, but they aren’t against using it for things like skills tracking. At the end of the day, they just want AI to work in their favor, unlocking opportunities rather than reducing them to a static list of skills and competencies that never gets updated or used.
While the technology is catching up, those engaged managers and episodic skills inventory updates will be critical (but not perfect) stop gaps.
The Reality Check: Wanting to Be Skills-Based Isn’t Enough
Moving beyond degrees and job titles is a step forward, and we should strive for that future. Degrees and titles truly are a bad surrogate for what a person can do.
But for skills-based organizations to succeed, they need more than good intentions. We need to build a dynamic, real-time understanding of what employees can actually do, not just at one moment in time but also as they grow and evolve.
Companies that eventually get this right will have a competitive edge in workforce planning, hiring and retention.
Editor's Note: Explore other articles on the skills-based workplace:
- Skills-Based Hiring Is All Talk and (Almost) No Action — Skills-based hiring provides clear benefits, but few have adopted the practice. A look at what can be done to remediate this, including an alternate approach.
- What AI Upskilling Looks Like at Every Level of the Organization — A 3-tiered approach to AI upskilling for leaders, managers and individual contributors.
- Internal Mobility Is a Win for Everyone, But It Still Isn't Happening. Here's Why — Employers need to understand what kind of attitudes, behaviors and practices are limiting their ability to move talent internally.
