Employers are steadily building skills-powered organizations, a critical development given that half of HR leaders see skills shortages as a top threat to their businesses in 2025, according to a March report from global consulting firm Mercer.
The positive news from insights of more than 1,100 talent, rewards and HR team leaders across 74 countries is that employers seem to have significantly greater knowledge of skills than in the past, the report found.
This increased understanding has led many companies to develop and strengthen the formal infrastructures — such as skills mapping and skills-based rewards — underpinning their talent strategies, Mercer said.
For example, about half of team leaders surveyed said they’ve established a skills library and made progress in mapping skills to jobs. Almost 70% identified the most critical skills for their departments, the study found.
Organizations are using various methods to map skills to individuals, with the majority doing so based on current job roles. They’re also relying on employees and managers to self-report and identify skills.
Notably, companies that describe themselves as highly effective at attracting in-demand skills are almost twice as likely to have skills mapped to individual employees, according to the study.
Proficiency frameworks are crucial to the process because they distinguish among different levels of competency or expertise in any given skills, Mercer emphasized.
Skills-based reward programs are also catching on as a way to address skills gaps. The survey revealed that 23% of companies, up from 17% in 2023, now have some sort of program linking skills to rewards.
Additionally, 45% of HR leaders are rewarding skills acquisition, now the top approach for filling an organization’s needed skills, the study found.
Employers have a clear opportunity to make a positive change when it comes to upskilling that could dramatically change the way employees grow, the CEO of learning technology company D2L previously stated.
They’re also likely to find employees on board with the change, according to a December 2024 report from the Global Labor Market Conference. The report indicated that employees, who see their current skills quickly becoming obsolete, value self-improvement, with 44% of survey respondents saying the responsibility for upskilling falls on them.
A March report from Gartner offers another key tip: Employees hired because they show promise are nearly two times more likely to perform effectively than those hired for skills proficiency.
Organizations are transforming their capabilities so rapidly, they can’t acquire all the skills they need, Gartner’s director of HR practice explained.
To speed up skills development and internal mobility, HR leaders need to shift to building on promise, meaning “a willingness and ability to learn new skills from a minimum foundation,” Gartner said.
One stand-out finding from the Mercer study may be particularly encouraging for HR and talent teams: Leadership buy-in is no longer a top obstacle to skills-based strategies, indicating “that the business case has been proved,” Mercer said.
