The European Commission already declared 2023 as the Year of Skills. A year later, it seems that the promised skills revolution is still not very evident in practice, at least at first glance. The death of the CV and diploma requirements has been predicted often, but in daily practice, they still appear to be alive and well. However, if you look a little closer, you’ll notice that change is indeed happening. And often, A.I. plays a role in this. Not only because A.I. continuously reshapes today’s and tomorrow’s jobs but also because it enables new ways of matching and brings about a different way of thinking about roles.
In a new report, 81% of employers say they are already using skills-based hiring.
This can be seen, for instance, in a recent international report from the originally Dutch company TestGorilla. In this report, no less than 81% of employers now say they are using some form of skills-based hiring, up from 73% last year, making skills-based hiring the most important form of recruitment and selection. Especially in the tech sector, the method is gaining traction, with 88% of tech companies saying they have switched to it. This is partly because employers in the study claim that skills-based hiring has reduced their mishires by 90%.
Roles, not functions
The importance of A.I. in this is highlighted in Deloitte’s Generative AI and the Future of Work report. Traditionally, organizations structured their recruitment strategies around job titles as a way to define the skills and expertise needed for each role in their hierarchy. But according to Deloitte, thanks to A.I., this approach is increasingly unnecessary and may even hinder organizational agility and innovation. By viewing roles as a collection of shifting tasks and skills rather than a fixed job title, companies can better respond to changes—particularly the rise of A.I. in the workplace.
Deloitte’s report highlights IKEA as an example. The Swedish furniture company has implemented an A.I. customer service bot called Billie. According to IKEA, Billie has handled more than 47% of customer inquiries over the past two years, freeing up nearly 10,000 call center employees to learn new skills, including those of interior advisors who provide customers with design advice. By retraining and upskilling these employees, IKEA was able to create a new revenue stream, retain skilled workers, and foster an environment where employees can continuously learn.
Both a disruptor and a savior
This is also likely to be the case in the world of recruitment, predicts Forrester analyst Betsy Summers. “A.I. is both a major disruptor and savior of the labor market in the sense that GenAI will impact 4.5 times as many jobs as the number of jobs it replaces, while also having the potential to help manage and retrain the skills it replaces. The key is to assess which skills your organization needs to succeed and to identify how these skills might be affected by A.I. to create a reskilling plan for the future.”
“A.I. forces organizations to think more in terms of tasks than functions.”
A.I. is forcing organizations to think more in terms of tasks than functions, according to Summers. In addition to helping recruiters write job profiles, identify competing skills, assess the final job post for possible biases, provide information on interview questions, and help schedule each interview round, A.I. will increasingly play a role. “There will be tasks that A.I. can perform better than humans, tasks that still benefit from a human touch, and situations where a combination of humans and A.I. will be the best approach,” says Summers.
The risk of fraud
A recent report from campus recruiter Veris Insights also predicts that skills are finally becoming the currency of the job market. This is particularly true as skills taxonomies are improving across the board, with consistent, standardized definitions, allowing jobs and candidates to be better categorized and compared. This doesn’t only affect the recruitment process, the report says. It also enables organizations to facilitate internal mobility and make build, buy or borrow decisions around talent.
“A.I. will help companies make better build, buy or borrow decisions regarding talent.”
However, as with traditional CVs and cover letters, fraud also looms here, the company’s analysts warn. Employers will increasingly ask for verifiable skills, which will, in turn, impact the rise of skills passports like the Netherlands’ SkillsCV or, in the U.S., Digital Learning and Employment Records (LERs), a type of skills wallet that has been in development since 2020 and is now recognized and usable in 19 different fields.
Growth in skills assessments
With these kinds of skills passports, which can also be found at platforms like WayTo, Credly, and MyHub, candidates can not only showcase their validated skills on platforms like LinkedIn, but they can also send them directly to employers via a link or a QR code. This could save employers and recruiters significant selection time. However, they foresee that it will lead to huge growth in the skills assessment market, from $2.3 billion globally in 2023 to $7.4 billion by 2032, with an annual growth rate of 12.6%. This will be fueled in part by A.I.
This aligns with what Jesuthasan and Boudreau write in their book Work Without Jobs and with the recent book The Skills-Powered Organization by the same Ravin Jesuthasan, now with Tanuj Kapilashrami. The authors argue that A.I. is increasingly replacing fixed job descriptions with fluid and flexible task packages supported by technology. A.I. can also enable ‘internal gig‘ platforms to drive internal mobility and bring tasks and skills closer together, helping organizations become future-proof.
Larger talent pool
In the U.S., there are signs that skills-based hiring is gaining momentum. For example, 14 states have dropped diploma requirements for state jobs. The federal government has even encouraged skills-based hiring in specialized areas like cybersecurity, affecting 100,000 jobs in the federal workforce. According to a Harvard Business School and Burning Glass Institute report, the annual number of job postings with no diploma requirement quadrupled between 2014 and 2023.
The annual number of job postings with no diploma requirement has quadrupled between 2014 and 2023.
For employers, one of the key benefits is access to a larger talent pool. This allows companies to consider more qualified candidates for certain roles (while also improving their diversity efforts). The skills revolution can also open new doors for job seekers, especially for those who have traditionally been underrepresented in certain sectors or occupations or people who have recently acquired relevant skills but don’t have a 4-year degree to show for it. HR systems, which often use diploma requirements as a filter, still screen them out today.
Challenges
Challenges remain in practice. According to the Burning Glass Institute, for every 100 vacancies where diploma requirements were dropped, fewer than 4 non-degreed workers were hired. And in San Antonio’s Ready to Work initiative, less than 50% of participants were placed in a job within 6 months, despite the intensive case management and job training involved.
But here too, A.I. comes to the rescue. By helping identify and categorize skills, better matching them to job requirements than traditional CV screening, and even powering learning platforms that help workers acquire new skills—certifying and assessing them accurately—career paths can become more fluid, with progress based more on skill acquisition than on the time spent in a particular role.
Conclusion
Conclusion: we’re far from finished with the skills revolution. In fact, we might just be at the beginning of it. But the A.I. revolution is helping it take off in several ways. On the one hand, A.I. is turning job roles into more specific sets of tasks and skills, and on the other, it is mapping out skills and making them tradable in the (internal and external) job market. And not to forget: the ability to work with A.I. itself is becoming an increasingly important skill in almost every sector and role. The only thing left is to think about how to validate that skill properly…
