As business leaders voice concerns about talent shortages and uncertainty linked to the adoption of artificial intelligence tools, companies are increasingly turning to skills-based hiring, according to a March 5 report from Workday.
About half (51%) of leaders said they’re worried about future talent shortages. Although 54% said they have a clear view of the skills within their workforce today, only 32% said they’re confident their organization has the skills for long-term success.
“AI is reshaping the workplace, but the human element has never been more essential,” Chris Ernst, chief learning officer for Workday, said in a statement. “Organizations that embrace a skills-first mindset will not only unlock AI’s potential but also harness human ingenuity in new and transformative ways.”
In a global survey of 2,300 business leaders in director positions or higher, 81% agreed that adopting a skills-based approach improves productivity, innovation and organizational agility.
Many companies appear to be making the shift to skills-based hiring. About 55% said they’ve begun the transition to a skills-based talent model, and another 23% said they plan to start the transition in 2025.
Leaders also pointed to skills-based strategies as a way to help close opportunity gaps, including increased access to job opportunities for employees (82%), higher workforce equity (72%) and lower unemployment (61%).
So far, technology hiring managers and candidates have reported notable shifts with skills-based hiring, according to a Motion Recruitment report. The transition has helped IT companies move away from traditional hiring criteria and address skills shortages in the industry, the report found.
Despite growing popularity, however, skills-based hiring appears to be lagging behind ambitions, according to a report from The Burning Glass Institute and Harvard Business School. Most companies haven’t yet made changes to drop degree requirements or increase their share of workers without degrees, the report found.