December 8, 2022

A Tough Economy Calls for a Skills Intelligence Advantage

Managing employees through the Great Resignation and the most recent rounds of cutbacks have created some of the toughest yet for talent and HR leaders to date. Yet many organizations are finding that the silver lining to all this upheaval is developing more resilient and collaborative ways to manage their entire talent ecosystems. 

“Talent strategies must be one holistic strategy,” said Kate Bravery, Advisory, Knowledge, and Insights Global Leader at Mercer, during a Transforming for the Future podcast. “Talent strategy is now one continuous conversation from talent acquisition, talent management, talent marketplace to talent development. That gives incredible opportunities for organizations and individuals to get that mobility in the organization.” 

The one common thread running through every part of the talent ecosystem to tie it all together? Skills.  

Organizations that focus on upskilling and reskilling internally, hiring for much-needed skills externally, and bringing on contingent workers to fill skills gaps will be the ones coming out ahead next year and in the years to come. In the Eightfold AI 2022 Talent Survey, more than half of surveyed HR leaders said having the right skills to perform a job was critical. 

Andrea Shiah, Head of Talent Strategy and Transformation at Eightfold AI, joined Bravery for the Mercer podcast to discuss building more resilient and agile workforces. In this conversation, Bravery and Shiah discussed how having a skills advantage can transform talent strategy, from hiring and upskilling to workforce planning.

Here are a few highlights:

Despite recent layoffs, the hiring market will remain tight, especially when retaining top talent. 

“Our global talent trends research shows that 70 percent of HR are experiencing higher than average employee turnover this year,” Bravery said.  “Despite the onset of the recession, they still believe it’s going to be a very tight talent marketplace in the next 18 months.” 

The pandemic spurred digital transformation, forcing organizations to digitize and move services online. And it’s not going away. Unfortunately, organizations can’t hire their way out of this problem, as technology and digitization continue to drive critical demand for particular skills.

Organizations have to quit looking at jobs as “jobs” — and start deconstructing them into their simplest form: skills. Then once talent leaders have a view of the skills they already have in-house, they must pinpoint the skills they need to drive transformation.

“We’re seeing in our data trends that there are three to five-year windows where we’re seeing these shifts [in skills],” Shiah said. “So for a company to be agile and to meet those demands, they have to shift how they’re thinking about their talent and focus on skills, understand those trends, and define what’s critical for them to drive their business success to get where they want to go.”

A Tough Economy Calls for a Skills Intelligence Advantage

Bravery said that while skills have been trending in Mercer research for a few years, this past year, they became the No. 1 area of talent investment that executives believed would deliver ROI. And while many organizations have been looking at skills when hiring, in the last year, almost half (48%) were now looking at using AI-powered talent intelligence platforms to fuel their internal marketplaces, too.

Strategic workforce planning is key to transforming and accelerating business, industry, and societal trends.

With digital transformation, the pressure is on, and we see it in our data,” Shiah said. “Companies are behind. Looking across all industries, they’re behind in their IT skills. So suddenly, we’re seeing workforce planning rising to the top as a priority.”

Shiah added that while every organization is undergoing digital transformation, some industries are also entering new realms in which their people have to learn new technologies. As a result, these companies will also need to change how they do things.

“Financial services is one of the first movers,” Shiah said. “This was driven by competition with the fintechs, creating a need to strengthen how they acquire talent and upskill their employees.”

From healthcare to pharmaceuticals, finance to high tech, technological transformation is causing massive upheaval in traditional industries that need people with the latest skills or the ability to learn them. As a result, Bravery said strategic workforce planning is also the top area where HR was focusing this year — and only anticipates it will be a high priority for next. 

“It’s essential to take that skills lens to it because it’s not just your net number of people who will meet your demand curve,” Bravery said. “It is the capacity that they have and the capability that I have [to see their skills]. And I think that is the real difference.” [Click to Tweet]

Don’t let DEI best practices slide in hard times. It’s one of the best ways to find skilled talent.

It’s essential not to undo progress during economic or other market difficulties. Shiah said openness to hiring people from all backgrounds and not depending on résumés or traditional networking would be vital in navigating any crisis. 

Already, tech layoffs are disproportionately affecting HR and DEI departments. “Experts caution that this line of thinking is short-sighted,” Fortune states. “The market ebbs and flows, and when the economy recovers, companies that made deep cuts to recruitment or DEI will scramble to rebuild those teams and catch up to the talent initiatives their competitors kept in place.”

A Tough Economy Calls for a Skills Intelligence Advantage

Again, a skills-based approach will help level the playing field in any organization. “Just using skills fundamentally to review talent and make decisions on talent is a great way to establish inclusivity,” Shiah said. 

When organizations search for potential candidates, hiring managers often give recruiters a lengthy list of job requirements with the mindset that the more things they require for a role, the better talent they’ll get.

In practice, the opposite happens. When managers make long lists of requirements — many of which are likely outdated, irrelevant, or becoming obsolete — organizations are excluding qualified candidates from entering the talent network. 

Shiah said one of the best ways to attract diverse talent is to push back on traditional hiring methods. 

“Do you need all these requirements? Do you need that degree? Do you need this many years of experience?” Shiah said. “One of the things that skills AI allows recruiters to do is to show their hiring leaders, ‘Look, as you add on all these requirements, your pool of talent is dwindling, and the diversity of that talent is dwindling.’ So you can pressure-test whether you need those requirements.”

In the bigger picture, Shiah said that by looking at skills, not requirements, you’re also setting the groundwork to build better relationships and credibility for your organization. 

You’re able to identify individuals from diverse channels who are strong matches to roles so that recruiters can spend their time effectively building those relationships and credibility for the company,” she said. “That’s a great way to pipeline the talent. So when the role becomes available, you have a diverse slate.”

Finally, change management is hard but necessary. 

Bravery said that the biggest challenge Mercer’s clients have when adopting skills intelligence is the mindset shift managers need to look at their talent in new ways. 

One behavior that managers tend to gravitate toward is hoarding their talent. It makes sense on the surface — if you have a great employee, you want to keep them in your department. 

This behavior results in a poor employee experience. For example, in the Eightfold Talent Survey, 70 percent of employees said they wanted opportunities for promotions, with more than 60 percent wanting visibility into the skills they have and that they’d need in the future. Yet only 35 percent of employers offer everyone opportunities to explore new roles within the organization.

“When you have the kind of transparency for employees to see roles across the company, all of a sudden, you’re empowering them for their career movement,” Shiah said. “Leaders must be very comfortable supporting their employees to move to other roles, including the best talent on their team. Because if you’re not going to help your employees find opportunities internally, they’ll look externally.”

Despite hiring slowdowns, freezes, and layoffs, Shiah said top talent could move on in this tight labor market. However, now is the time to be more transparent and create a supportive environment to promote positive employee experiences. This enables employees to learn new skills or switch roles or departments, which benefits the organization in the long run. 

“You just have to shift people’s mindsets and that they’re empowered to do this,” Shiah said. “If you step back and think about it, that’s the right thing to do, and that’s how it should be. The change is necessary to compete into the future.”

For this entire conversation, listen to the Mercer podcast “How Skills AI Can Help You Plan for a Tough Economic and Talent Climate.”