AI Is Changing the Way We Look at Job Skills — Here's What You Need to Do to Prepare. As workplace roles evolve and disappear faster than ever, companies that focus on skills will have an advantage.

Talk about an HR nightmare: Today, 1.7 million people work in the U.S. auto industry, and 99% of cars sold or on the road are gas-powered. But that's all about to change … and nearly overnight. By 2030, plans call for half of new car sales to be electric — making millions of roles redundant and creating the need for millions more.

Welcome to the brave new labor market. As technology advances at an ever-faster clip, seemingly no job is safe. Generative AI has only quickened the pace, leaving organizations scrambling. Some workplace roles are becoming obsolete in the course of months, not years, while new ones are constantly emerging.

For companies, keeping up with these changes calls for a dramatic shift in mindset: Goodbye jobs, hello skills.

Businesses have traditionally managed talent by fixating on rigid job descriptions. But hiring and firing based on ever-changing roles is proving increasingly problematic. So progressive employers are taking a skills-based approach instead — reconceiving employees as a bundle of malleable skills rather than a fixed role.

That assembly line worker may specialize in building gas engines, for instance. Under the hood, however, they likely have a basket of hundreds or even thousands of skills that may be just as applicable in the EV setting.

Skills are more granular and harder to track — but for today's employers and workers, they're far more useful than roles that may not exist tomorrow. When German industrial giant Henkel set out to upskill its workforce, for instance, it uncovered a repertoire of 52,000 skills, many of which were highly relevant in an increasingly digital economy.

The challenges (and rewards) of taking a skills-based approach to talent cross nearly all sectors. Unfortunately, many organizations are flying blind when it comes to what skills they're missing, how certain skills drive business results and what reskilling and upskilling programs they need.

As co-founder of an HR tech firm that helps organizations use people data to look at their business through a skills lens, I've seen what powerful results it can deliver for companies and their workers. Here are three key steps to move from roles to skills.

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Step 1: Understand the skills you already have

When a company says it's in "hiring mode," I immediately get suspicious. Boosting headcount might sound like a logical move — but often, it's putting jobs before skills. A smarter approach: Start with the business problem and ask, Can our existing talent base solve it?

Unilever went that route by launching an internal talent marketplace that lets workers bring their skills wherever they're needed. The company unlocked 700,000 hours to devote to some 3,000 projects, shrinking its need for new hires. Oh, and productivity climbed more than 40%.

Using people analytics, organizations can take a systematic approach to understanding their talent base. Create a comprehensive catalog of skills. Match them against roles to identify gaps. The payoff: informed choices about whether to reskill, reassign or hire people. Even better, the skills gleaned become the centerpiece of internal and external job postings.

Companies might be able to spot skills gaps at a high level, but their grasp of details is often fuzzy at best. In one survey, almost 90% of organizations recognized they had a skills gap problem or expected one within five years. But a clear picture of current skills or what roles likely faced disruption? On that front, more than half of companies were in the dark.

Step 2: Understand the skills you'll need tomorrow

Just as important as understanding what skills you have is understanding what skills will be needed in the years ahead. Without an intentional approach here, it's easy to get caught off guard — even in forward-looking sectors.

For instance, more than 250,000 U.S. technology workers were let go in 2023 — a 50% surge over the previous year. Along with countless startups, even giants like Amazon, Google and Meta are feeling the pain. Could they have avoided such a purge?

Yes, by leaning on the emerging field of skills-based workforce planning. By turning to experts who classify what skills are waxing and waning in particular industries, companies can plan ahead to have the right number of people for the right tasks.

A growing number of skills-based platforms use predictive models to peer into the future — anticipating, for instance, that demand for AI collaboration skills will climb in years ahead, while demand for traditional coding skills will drop. It's far from an exact science. But skills vendors can make educated guesses about how technology and other factors will change how people work. That foresight is increasingly important as AI lays waste to entire job categories.

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Step 3: Reskill and upskill employees to get there

To get the most out of a skills-based approach, it's critical to embrace reskilling and upskilling rather than simply firing and hiring. Take PepsiCo, which in 2022 launched an academy that offers its 300,000 workers free training in digital skills. More than 11,000 employees signed on during the first year, earning certifications such as data scientist and site reliability engineer.

Walmart recently launched a partnership with an online education provider that will offer its 1.5 million U.S. employees free courses in data analytics, software development and data-driven strategic thinking. Through its $2.1 billion Upskilling 2025 programs, Amazon is giving 300,000 workers access to education and skills training.

Similar reskilling and upskilling efforts are popping up at businesses large and small. That's driving a boom in learning and development platforms, which make it easy for companies to create programs that suit their needs.

Employees want those programs. When my company surveyed workers, almost 60% said they rely on employer-led skills development for career growth. Nearly 9 in 10 employees said their employer should play some role in reskilling so they aren't easily replaced by AI.

What's the ROI from putting skills front and center?

The benefits of taking a skills-based approach to developing talent aren't hard to see. When Deloitte surveyed businesses about human capital trends, almost 95% said moving away from a focus on jobs is a key success factor for them.

Besides doing a better job of matching people with what needs to be done, skills-based companies are more efficient and competitive. Nimble enough to adapt to change, they can evolve instead of stagnating in the old, roles-based way of doing things.

Related: Why Skills Shouldn't Be Just a P.S. on a Resume

Want proof? Skills-based organizations are more than twice as likely to place talent effectively, 57% more likely to anticipate and respond effectively to change, and 52% more likely to innovate. Among the other rewards: a bigger and more diverse hiring pool, better candidates, lower recruiting costs and greater employee loyalty and retention.

Will traditional job roles disappear as employees increasingly become skills repositories? I don't see that happening anytime soon. After all, roles are an easy and useful shorthand for describing what people do. But with help from people analytics, forward-looking companies will learn to see roles as a far more fluid collection of competencies — underpinned by skills that can be adapted to a changing job climate.