The AI Paradox: Mapping Skills vs. Defining Capabilities in the Modern Workforce

Nearly 70% of those surveyed anticipate generative AI will increase competition, drive changes to their business models and require new skills from their workforce within the next three years. PWC, 2024

In the realm of organisational development, where artificial intelligence (AI) and human resources (HR) are leading significant discussions, should the focus on performance improvement and training needs be solely on mapping and enhancing skills, or should we consider that AI might achieve greater success and utility in defining and developing capabilities, which is crucial for navigating the complexities of workforce management in the digital age?

In the rapidly evolving landscape of AI and HR, the focus has predominantly been on mapping skills. However, a deeper dive reveals that capabilities offer a more comprehensive understanding of workforce potential. This article explores why AI finds it easier to define capabilities than to map skills, and why the current obsession with skills might be a misstep.

Understanding Skills and Capabilities

Skills are specific, learned abilities to perform tasks or activities. They are concrete and tangible, making them easier to measure and assess. Examples include coding, data analysis, writing, graphic design, public speaking, and operating machinery. Skills are typically acquired through education, training, and practice.

Capabilities, on the other hand, refer to the broader ability to perform complex tasks or functions. They encompass multiple skills and include behavioral and attitudinal aspects, making them broader and more holistic. Examples of capabilities include leadership, strategic thinking, problem-solving, adaptability, and innovation. Capabilities are developed over time through a combination of skills, experiences, knowledge, and personal attributes.

65% of workers report that the skills and capabilities required to perform their jobs have changed in the past two years. (Deloitte, 2022B )

The Skills Rabbit Hole

The current trend in HR and talent management is heavily focused on skills. The reasons are apparent: skills are specific, measurable, and can be directly linked to job requirements. AI technologies have advanced significantly in mapping these skills, using data from resumes, job descriptions, and performance reviews to create detailed skill profiles for individuals and job roles.

However, this focus on skills often leads to a narrow view of an employee's potential. Skills are task-oriented and static, meaning they can quickly become outdated in a fast-paced, ever-changing work environment. This limitation prompts the question: Why is everyone going down the skills rabbit hole when capabilities cover more?

Only 14% of business executives strongly agree that their organization is using the workforce’s skills and capabilities to their fullest potential. (Deloitte, 2022A )

What Happens if HR Fail To Adapt to Change

Skills Obsolescence

As technology evolves, many skills rapidly become outdated. For instance, programming languages that were in high demand a few years ago might now be obsolete. Organizations focused solely on current skills may find their workforce ill-prepared for future challenges.

Skill Gaps

A narrow focus on specific skills can lead to skill gaps when those skills are no longer relevant. This creates a reactive rather than proactive approach to workforce development.

Leadership Development

• Leadership and strategic thinking are capabilities that encompass a range of skills, experiences, and personal attributes. A skill-centric approach might overlook individuals with high leadership potential who do not possess the current “in-demand” skills.

Innovation Stagnation

• Skills are task-oriented and often do not encourage out-of-the-box thinking. Relying solely on skills can stifle innovation and creativity within an organisation.

Employee Engagement and Retention

Job Satisfaction

• Employees who are pigeonholed based on their skills may feel undervalued and under-utilised, leading to decreased job satisfaction and higher turnover rates.

Risk of Bias and Inequity - Narrow Skill Focus

A focus on specific skills can perpetuate biases and inequities, particularly if those skills are more accessible to certain groups. This can lead to a lack of diversity in the workplace.

Strategic Misalignment - Short-term vs. Long-term

Skill mapping is often reactive, addressing immediate needs without aligning with long-term strategic goals and future workforce needs.

While skill mapping has its merits, it is insufficient in the face of rapid technological advancements and evolving workplace dynamics. By not adapting and focusing solely on skills, organisations risk obsolescence, limited growth, and missed opportunities for innovation and leadership development.

Emphasising capabilities over skills allows for a more comprehensive understanding of workforce potential, fostering adaptability, innovation, and strategic alignment. AI can play a crucial role in this transition, providing the tools to define and develop capabilities effectively. Embracing this shift is not just a strategic advantage but a necessity for thriving in the future of work.

Capabilities: The Grown-Up Version of Skills?

Capabilities can be seen as the grown-up version of skills. They represent a higher-order integration of skills, knowledge, and behaviors, enabling individuals to adapt to various situations and perform broader functions. For instance, leadership is not just about having good communication skills; it also involves strategic vision, emotional intelligence, decision-making under pressure, and the ability to inspire and motivate others.

While skills provide the foundation, capabilities build on this foundation to enable holistic performance and growth. Unlike skills, capabilities are dynamic and evolve with experiences, making them more suited to the demands of modern workplaces.

Limitations of Skills vs. Capabilities

Skills:

??Static Nature: Skills can become obsolete as technology and job requirements change.

??Narrow Focus: Skills are task-specific and do not account for the broader context of performance.

??Measurability: While easy to measure, skills do not fully capture an individual's potential or adaptability.

Capabilities:

??Complexity: Capabilities are harder to measure and define due to their holistic nature.

??Development: Building capabilities requires time, diverse experiences, and a combination of skills and personal growth.

Leveraging AI: Skills or Capabilities?

AI excels in mapping and analysing skills due to their tangible and measurable nature. However, the true potential of AI in HR lies in its ability to understand and develop capabilities. By analysing patterns in employee behaviour, learning pathways, and performance data, AI can help identify and nurture capabilities.

For example, AI can track an employee's progress through various projects, identify moments of effective problem-solving, leadership, or adaptability, and provide insights into their capability development. AI-driven platforms can recommend tailored learning experiences that not only enhance skills but also contribute to broader capabilities.

The Future of HR 2035: A Capabilities-Driven Approach

Incorporating a capabilities-driven approach in HR requires a shift in mindset from task-specific skill acquisition to holistic development. Organisations should leverage AI not just to map skills but to understand and foster capabilities that align with their strategic goals. This approach can lead to a more adaptable, resilient, and future-ready workforce.

By focusing on capabilities, companies can better prepare their employees for the uncertainties of the future, ensuring they are equipped not just with the skills of today, but with the capabilities to navigate and thrive in the challenges of tomorrow. As we move forward, it becomes increasingly clear that while skills are essential, capabilities are the key to unlocking sustainable growth and innovation in the era of digital transformation.

30% of companies say their employees have needed skills, but few understand workforce capabilities today. (i4cp, 2021)

HR 2035 - What Does The Future Look Like?

At AI Capability , we have conducted thorough and comprehensive analysis on the future workforce, specifically targeting the landscape of HR in 2035. This research encompasses a wide range of critical insights and data, here is a taster of some of the areas we cover:

1. Emerging Trends and Technologies

??Identification of key technological advancements and trends shaping the future of HR, including AI, machine learning, blockchain, virtual reality and AI teacher.

??Insights into how these technologies will transform traditional HR functions and practices.

2. Skills and Capabilities Forecast

??Detailed predictions on the essential skills and capabilities that will be in high demand by 2035.

??Analysis of how the current skills landscape will evolve into capabilities with emphasis on citizen learning and digital cultural adaptability.

3. Workforce Demographics

??Projections of workforce composition changes, including generational shifts, diversity, the makeup of the technologically integrated homogeneous teams, flexible work models,

??The impact of demographic trends on organisational culture and employee expectations.

4. AI Integration and Ethical Considerations

??The real impact of the AI Committee, and how good governance will save the organisations from unnecessary litigation and cost.

??Strategies for integrating AI into HR functions such as recruitment, talent management, and employee engagement.

??Ethical considerations and guidelines for implementing AI, focusing on transparency, fairness, and bias mitigation.

5. Future of Work Models

??Exploration of emerging work models, including remote work, hybrid work environments, and gig economy trends.

??Analysis of how these models will affect workforce planning, collaboration, and productivity.

6. Leadership and Development

??The evolving role of HR leaders and the skills and capabilities they will need to succeed in the future.

??Innovative approaches to leadership development, including personalised learning environments and AI-driven global mentorship programmes.

7. Human-Centric Work Environments

Well-being and Mental Health

??There will be a stronger emphasis on mental health and well-being in the workplace, with organisations offering comprehensive support systems.

??Work-life balance will be a priority, with flexible working hours and remote work options being standard.

Employee Experience

??Enhancing the overall employee experience will be a key focus, with organisations striving to create engaging, supportive, and fulfilling work environments.

??The role of AI in creating more responsive and satisfying workplace environments

??Future trends in employee experience, focusing on personalised, technology-driven engagement strategies. An increased focus on mental health.

Flexible Work Models

??The gig economy will continue to grow, with more people opting for freelance, contract, and gig work instead of traditional full-time employment.

??Organisations will leverage a mix of full-time employees, freelancers, and gig workers to meet their needs.

Portfolio Careers

??Many workers will have portfolio careers, balancing multiple part-time roles or projects simultaneously, offering greater flexibility and work-life balance.

??Focus on Sustainability and Corporate Social Responsibility.

Green Jobs

??There will be a significant increase in jobs focused on sustainability and environmental responsibility as businesses commit to reducing their carbon footprint.

??Roles in renewable energy, waste management, and sustainable product design will be more prevalent.

Corporate Social Responsibility (CSR)

??Employees will expect organisations to engage in meaningful CSR activities, and jobs related to CSR will become more prominent.

8. Regulatory and Compliance Landscape

??Anticipated changes in employment laws and regulations impacting HR practices.

??Best practices for staying compliant in a rapidly changing legal environment.

9. Talent Acquisition and Retention

??Future strategies for attracting and retaining top talent in a competitive market.

??The role of AI and data analytics in optimising recruitment processes and improving retention rates.

10. Learning and Development Innovations

Citizens Learning Environment

??Continuous learning will be a norm, with employees regularly updating their skills and capabilities to stay relevant via their personalised training environment. It will be seamless integrating into performance management and daily projects via the strategic planning framework.

??Predictions on the future of corporate learning, with an emphasis on continuous development and reskilling.

??The integration of AI in creating adaptive learning platforms (environments) that cater to individual employee needs and career goals.

Micro-credentials and Certifications

??Traditional degrees will be complemented by micro-credentials and certifications, which will provide targeted, just-in-time learning opportunities.

How To Get This Research Into HR 2035

Our analysis is rooted in extensive research and data, offering actionable insights to help HR professionals and organisations prepare for the future. By understanding these trends and developments, we aim to equip HR leaders with the knowledge and tools necessary to navigate the complexities of HR in 2035 and beyond.

If you would like to discuss HR 2035, attend our podcasts, Join Our VIP Panel or download our HR 2035 book, please contact Tess Hilson-Greener via LinkedIn or at www.ai-capability.co.uk