Strategic Shift: Skills-Powered Organisations in the Age of AI 

Japanese Aussie mum and daughter skateboard together   
Japanese Aussie mum and daughter skateboard together    

The impact of digital technologies on the workforce is undeniable. According to the World Economic Forum's 2023 "Future of Jobs" report, employers predict that 44% of workers' skills will be disrupted by technology in the next five years. This means that six in 10 workers will require additional training by 2027.

Despite this growing need for new skills, many organisations still rely on traditional job titles and descriptions when searching for talent. As a result, they often prioritise credentials and past experience over actual skills. This approach makes it challenging for employers to find the right people for the work that needs to be done. In fact, an analysis of current skills shortages in Australia revealed that 36% of assessed occupations were in national shortage in 2023, which is five percentage points higher than the previous year.

The problem of filling roles becomes even more pronounced when organisations impose a university degree requirement, as this significantly narrows the talent pool. In 2023, 74% of Australians aged 25 to 74 had attained or were studying for higher education or vocational education and training (VET) certificates, diplomas, or degrees. However, only a third of Australians in the same age group held a bachelor's degree or higher, according to the Australian Bureau of Statistics. And while a tertiary qualification is critical in some jobs, it can neither measure important attributes such as creativity and motivation nor the skills gained along the way.

To address these challenges, a skills-powered talent model offers a different approach to finding talent. This model opens up opportunities to a wider pool of candidates while targeting specific skills and capabilities.

Benefits of a skills-powered approach

When implemented correctly, a skills-based approach offers a wealth of strategic and economic benefits.
  • For employers
    • Stronger recruiting, hiring, and retention capabilities
    • Increased workforce productivity and agility
    • More effective and efficient talent development and deployment
    • Optimisation of overall labour costs
  • For employees
    • Greater transparency around career progression requirements
    • Expanded, more democratic access to career opportunities
    • Improved access to training for developing marketable skills
    • Increased workforce engagement
By making skills the backbone of their talent practices, organisations can better allocate people to projects, help employees explore different career paths, and gain the flexibility to allocate their capital more effectively as their needs change.
Bradford Bell

Professor of Strategic Human Resources, Cornell University

Discover how employers are shifting skills strategies for an age of AI in a new paper issued with MIT SMR Connections:
Strategic Shift: Skills-Powered Organisations in the Age of AI.
The paper explores:

  • The business case for developing a Skills-Powered Workforce
  • Overcoming cultural challenges
  • How a skills powered model transforms the talent pipeline
  • Case studies
  • A checklist for building a skills-powered organisation

Strategic Shift: Skills-Powered Organisations in the Age of AI

Six in 10 workers require additional training before 2027. Find out how organisations can bridge skills gaps through data-driven strategies, buy-in, communication, goals and training.
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Mercer is proud to sponsor MIT SMR Connections for this skills strategy guide.
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Find out how organisations can create both the means and the enthusiasm to propel them to the skills-powered transformation they need by implementing a data-driven strategy, working to gain buy-in, establishing honest two-way communication, setting small-scale achievable goals, and providing useful training.