The labor market continues to exceed expectations and it's showing no clear signs of slowing down. Job creation continues to surge, according to the Bureau of Labor Statistics. It’s a massive amount of growth, far beyond expectations. But there is more to the story here, and we need to put this into perspective.
 

The bottom line: the biggest challenge in the labor market looking ahead is scarce skills, not scarce jobs.

With the unemployment rate below 4% for 24 consecutive months, this is the longest stretch of strength for the American workforce in more than five decades. From a hiring perspective, the question is how soon we’ll start to see the confidence mirrored more broadly on the employer side. Hiring has largely been a wait-and-see for many organizations. For others, it’s full steam ahead.

Let’s Set the Stage: There Is a Fundamental Disconnect

While talent supply has rebounded significantly, especially in white-collar roles, employers are still feeling the pinch. Most organizations in America today have one of two problems. Pipeline: they’re not getting the right people in, with the right skills. And pass-through: they’re not interviewing and hiring or advancing this talent, because they can’t see their skills or match them to the right jobs based on their skills.

So many companies are sitting on a goldmine of talent, but they can’t figure out how to tap into it. This will only get more acute. Smart organizations are getting out in front of it.

It’s Time Leaders Take a Non-traditional Approach to Hiring

HR leaders have talked about assessing someone beyond their specific experience for years. But, too often, they’ve relied on conventional competency-based methods. If we can tackle this, we can tackle an impactful business challenge and many existing social challenges that prohibit people from accessing career opportunities.

If leaders can look at prospective talent through the lens of their skills and capabilities, rather than their experience or what is on paper alone, it cracks the code to attracting non-traditional talent by eliminating traditional barriers to entry. Nailing this is a win-win.

Deloitte Human Capital Trends Report explains organizations with a skills-based approach are 107% more likely to place talent effectively and 98% more likely to retain high performers.

Utilizing AI to Develop Talent Is Where the Impact Lies

You can’t do this without an AI-powered platform that predicts, identifies and delivers the talent required to win — including diverse, undervalued talent with huge potential. If you can break down everything into a set of skills – and use AI and GenAI to match skills to roles, trainings and opportunities – you can more effectively and intentionally recruit and develop talent for today and the future.
 
Consider, for instance, individual skill and goal development. AI enables employees to effectively track progress and create personalized learning plans to quickly identify and reach goals. AI can additionally suggest relevant mobility opportunities, connect mentors and mentees, and highlight relevant training.

AI integration at the managerial level optimizes team performance and engagement, facilitating hiring for relevant skills. At the organizational level, a data-driven talent management strategy ensures HR supports employees in closing skills gaps and guaranteeing a great impact on business performance.

The Single Most Important Action Leaders Can Take Today

If you focus on boosting internal mobility, creating opportunities for advancement and matching people's skills to internal roles based on where the business is going, you will drive growth. There's no turning back. All signs point to these labor market conditions persisting for the foreseeable future. To disrupt is to effectively lead through change.

As people leaders, we can’t remain complacent when it comes to how we design talent strategies. If we stick with the way we’ve approached this in the past, we’ll miss out on a monumental moment in time to foster an engaging and resilient talent experience. Technology must be used to connect skills to development and business outcomes. When a company’s growth goes hand-in-hand with its people’s growth, it gives everyone a common mission to rally behind.

Author Bio

Sarah Tilley is SVP of Global Talent Management and Acquisition at ServiceNow.

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