In Putting Skills First: A Framework for Action, developed in consultation with leading experts from the public and private sectors, The World Economic Forum and PwC delve into “skills-first”, a term used to describe a new approach to talent management that emphasizes a person’s skills and competencies – rather than degrees, job histories or job titles – with regard to attracting, hiring, developing, and redeploying talent. By focusing directly on skills, themselves, rather than on how they have been acquired, a skills-first approach has the potential to democratize access to economic opportunities and pathways to good jobs for many more people than traditional approaches have done. Our analysis of data from a geographically diverse range of 18 economies, estimates that in total, more than 100 million people in these countries could be added to the global talent pool through a skills-first approach.
Skills and labour shortages are two of the most pressing concerns facing societies and economies today. The impact on businesses, for example, is immense. PwC’s latest Annual Global CEO Survey found that 52% of CEOs believe labour and skills shortages will significantly impact profitability in their industry over the next 10 years. These talent shortages come at a particularly critical time for businesses, with many of them challenged with reinventing their business models in response to a range of external and internal drivers ranging from economic and geopolitical uncertainty to stakeholder and competitive pressures.
The World Economic Forum’s latest Future of Jobs Report 2023 finds that organizations across all industries identify skills gaps and an inability to attract talent as the key barriers preventing industry transformation. And the situation seems likely to get more acute, as businesses race to fill what the World Economic Forum has described as the jobs of tomorrow.
This report highlights one key element of a potential solution. A “skills-first” approach to hiring and developing people has the potential to transform the way that labour markets operate, delivering significant benefits not just to business, but to our wider society and economy. A skills-first approach focuses on whether a person has the right skills and competencies for a particular role, rather than having the right degree, job history or previous job titles. It means that businesses get the skills they actually need for a particular job, but more than that, it democratizes access to good jobs for those people who have the competencies but not the right formal qualifications for a role. For many individuals, this removes a key barrier to their ability to apply their skills and contribute. A skills-first approach provides access to employment opportunities as well as good jobs offering career progression and higher earning potential from which they would otherwise have been excluded. At present more than 100 million people are underutilizing their existing skills in this way across the economies studied by this report.
For businesses, a skills-first approach vastly increases the potential pool of talent from which they can draw. Relaxing degree entry requirements, for example, as several businesses – including PwC UK – have already done for some roles, opens up the process to talented people who would have otherwise been excluded from the hiring process. More than that, it can help provide businesses with the specific talent they need to deliver on today’s priority business outcomes, whether that be fuelling innovation, enhancing customer experience, managing costs, or entering new markets.
Delivering such a fundamental change requires more than simply the involvement of HR teams. To make it work will require the involvement and collaboration of CEOs and policy-makers at the highest level. What is needed is a multi-stakeholder approach: CEOs need to make it a priority within their organizations, governments have to build an enabling environment and HR teams need to implement robust processes and practices.
That is why the World Economic Forum and PwC have collaborated to create this framework for action which businesses and governments can use to shape their skills-first approach. This report is the first in a two-part series, with the second report to be launched at the World Economic Forum’s 2024 Annual Meeting.
Adopting a skills-first approach has the potential to deliver a significant win – for individuals, for businesses, for our society and the economy. We hope to inspire organizations to take action.