Employers have a skill issue.

A few years ago, it seemed CHROs and CEOs were always talking about becoming a “skills-based organization.” But as ChatGPT took over the world in late 2022, executives, consultants, and academics alike hypothesized that, thanks to AI’s ability to automate tasks, there would be an imperative for companies to focus on how work gets done based on the skills needed to perform it, rather than traditional roles and hierarchies. Thus, the skills hype was born.

But most company-wide transformations fail, and this one was no exception.

“We’ve seen a lot of companies talk about becoming skills based, skills first and the majority of them do not progress beyond pilots,” Suketu Shah, a managing director and member of the people and organization practice at Boston Consulting Group, told HR Brew. He co-authored a white paper examining why companies fail at becoming skills-based organizations, and how to avoid their mistakes.

According to the paper, efforts to become a skills-based organization often fail because they are not tied to the overall business strategy. They are treated like an HR project, without input from other business leaders on planning and implementation, and often peter out in the pilot stages.

“The stuck kind of nature of this comes from the fact that a lot of companies stay very fragmented in their initiatives around this,” Shah said. “They treat the exercise as just creating a skills taxonomy and then running a pilot or getting a technology tool, but not really understanding the business capability you’re trying to build.”Some companies also start too big, attempting to typify every skill performed by every employee. This can create overwhelm for HR teams and lead to petering out as well.

“For me, it’s the whole, like, ‘How do you eat an elephant? One bite at a time’ analogy,” said Ciara Harrington, chief people officer at digital learning company Skillsoft. “It’s overwhelming. So people look at it… they think about it, and they talk about it, and they have workshops on it, but they don’t actually start to structurally change what they’re working on.”

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