The contemporary workplace is undergoing a swift transformation propelled by the escalating demand for tech and AI skills across a spectrum of job roles. This pivotal shift has brought forth Skills-First Transformation (SFT) as a fundamental organizational imperative.
Embarking on another collaborative venture with EY, our latest report, titled "Skills-First Transformation: A New Approach to Unlocking Talent Potential," meticulously explores the intricacies of SFT. We navigate the nuanced aspects of 'when and how,' peeling back the layers to reveal the prevalence, priorities, value realization, and challenges encountered by companies on a global scale.
Tech Skills as Essential Components: The Genesis of SFT
As we highlighted in our last report, "Tech Skills Transformation: Navigating the Future of Work in 2025 and Beyond," something important is happening. More and more jobs are requiring tech skills. This shift has brought about a new kind of employee, what we like to call 'power-users.' These folks have a mix of different skills that are super useful for getting things done across various parts of a business. With AI becoming a regular part of our lives, organizations really need these 'power-users' to stay resilient and keep a competitive edge.
SFT as a Foundation: 'When and How'
Skills-First Transformation emerges as the foundational approach to proactively identify and nurture these 'power-user' talents. This is achieved through the seamless integration of skills taxonomy, intelligence, and inventory data across business operations and the entire employee lifecycle. The key implication highlighted in the report is that for companies, the question is not 'if' they should adopt SFT, but rather 'when and how' to embark on this transformative journey.
Insights Unveiled: Prevalence, Priorities, and Challenges
The report unfolds four critical insights, offering a comprehensive perspective on the current state of SFT adoption worldwide:
- Prevalence of SFT: Over half of global companies (56%) have already initiated their SFT journey, with sectors such as telecom, technology products, and IT leading the way. The United States emerges as the frontrunner among geographic regions.
- SFT Priorities: Companies focusing on SFT exhibit priorities 1.5-2 times higher among HR leaders compared to non-SFT-focused companies. The objectives for SFT-focused companies encompass both building future skills and core HR objectives like reducing attrition.
- Value Realization: Transformation Leaders, those who have implemented SFT, report high positive impacts on key HR metrics such as retention and employee performance. Notably, these companies experience approximately 2x higher revenue growth compared to non-SFT-focused organizations.
- Challenges in the SFT Journey: Several challenges exist in the SFT journey, with a lack of skills intelligence tools, and insufficient leadership support being the most commonly reported obstacles. Early adopters, who initially focused on skills inventory and assessments, can mitigate these challenges by embracing skills intelligence.
Skills-First Transformation 2.0: Embracing Skills Intelligence
As organizations worldwide embrace SFT, the learnings from early adopters have validated its benefits while uncovering multiple challenges. Skills intelligence has emerged as the popular response, amplifying the advantages and overcoming obstacles, ushering in the era of SFT 2.0.
The Nuances of SFT: Maturity Levels and Operating Model Challenges
The report categorizes companies into three distinct maturity levels: Transformation Leaders, Transformation Aspirants, and Business-as-Usual (BAU) companies. This nuanced classification provides valuable insights into the varied stages of SFT adoption, enabling companies to benchmark their progress against industry peers.
The challenges faced by early adopters, detailed in the report, emphasize the need for a skills intelligence-driven operating model. Integrating skills data into HR processes and the availability of skills intelligence tools emerge as top challenges, which skills intelligence can significantly simplify and accelerate.
Conclusion: Embracing the Ongoing SFT Marathon
In conclusion, the journey of Skills-First Transformation is an ongoing marathon. Early adopter companies have completed only a fraction of the race, paving the way for Transformation Aspirants who can leverage Skills Intelligence to leapfrog early adoption challenges.
Skills Intelligence, beyond its role in SFT, is poised to become a cornerstone for organizations. Serving as a single source of truth for skills data, it lays the foundation for AI integration and empowers organizations to develop 'deep skills' while nurturing 'power user' talent at scale.
As we look towards the future, AI-powered Skills Intelligence is set to move towards ubiquity, akin to ERP and CRM systems. Companies with a current SFT focus can anticipate leveraging skills intelligence as a competitive advantage in the coming decade, further solidifying their position in the ever-evolving landscape of the future of work.
Want to know more about how a Skills-First Transformation can benefit your organization? Read the full report here!