Skill-based Organization – a game changer to address the talent & skill gap?

The way we work is undergoing a fundamental transformation. Automation and "thinking machines" are replacing human tasks and shifting the skills organizations seek. But what will the future look like?

Several megatrends are poised to transform society and with it, the world of work. Technological developments, the green transition, macroeconomic and geoeconomic shifts and demographic changes are reshaping the global labor market, altering both jobs and required skills. By 2030, 39% of employers expect worker’s core skills to change. 85% recognize the need to upskill their workforce.

However, despite a growing focus on continuous learning, upskilling, and reskilling programs enabling companies to better anticipate and manage future skill requirements, an estimated 85 million jobs could remain unfilled globally due to a lack of skills. 44% of employers have initiated programs to upskill or reskill their workforce, yet many initiatives fail to deliver their full potential due to misalignment with evolving business needs, rigid cultures, insufficient resources, and technology challenges. As a result, 52% of CEOs anticipate that workforce skill gaps will hinder their ability to innovate and create value by 2030. To stay competitive, leaders must move beyond traditional skill approaches and embrace more diverse, forward-looking strategies to build and retain critical talent & skills.

“As we look to the future, organizations must embrace a skills-based approach to stay competitive. It’s about identifying and nurturing the skills that drive innovation and growth, rather than just filling roles.”

- Leena Nair, CEO of Chanel, former CHRO of Unilever

Thriving in the future of work will require quick adaptation to emerging technologies, seamless collaboration across disciplines, and a commitment to continuous, self-directed learning. Traditional organizations that still rely on fixed HR processes focused on job titles and descriptions will struggle to remain competitive. Illustrating the urgency of these challenges, our Strategy& Talent Gap Viewpoint Series explores the talent shortages shaping key industries:

• Automotive: The shift to e-mobility and software-driven solutions is making most current skill profiles obsolete, creating a shortfall of ~60,000 unfilled roles in Germany by 2030.
• Semiconductor: Big Tech competition for STEM graduates, outdated working models, and weak talent management are holding back this critical sector, with Big Tech competition for STEM graduates, outdated working models, and weak talent management are holding back this critical sector, with ~350,000 vacancies expected in the EU by 2030.

• Telecommunication: Cost pressures and stagnant revenues are limiting investment in digital talent, widening the skills gap to ~360,000 unfilled roles across Europe by 2030.

A skill-based organization offers a progressive solution to today’s challenges. This approach prioritizes skills and competencies over degrees, job histories, or titles when attracting, hiring, developing, and redeploying talent. Employees are assigned roles based on their unique skills and strengths, rather than fixed career paths. This flexible structure fosters greater innovation, job satisfaction, and personal growth while valuing employees’ ability to contribute across various areas.

Caption: Stages of building a skills-based organization

A skills-based approach can deliver sustainable economic, business, and societal outcomes. Accessing alternative talent pools to address today’s skill and labor shortages enables business model reinvention, fuels profitable growth, job creation and more inclusive employment opportunities. Leading companies across industries are already reaping the rewards of their skill-based transformations.

However, despite success stories, no one company has fully transitioned into a skill-based organization yet. Establishing such an organization, where skills are the central element of the HR value chain, has significant implications for both the HR structure and the entire organization. It is a journey, not a one-time accomplishment, involving a cultural shift and requiring substantial time and resources. To initiate the underlying transformation successfully, companies should define their skill-based ambition based on a business-driven and therefore, highly context-dependent target picture. Consequently, not all organizations require a fully scaled skill-based transformation, as more focused – or even different - approaches might suffice to realize individual ambition levels.

A skill-based organization should not be viewed as a silver bullet to solve all current challenges but rather be approached strategically with careful consideration and long-term planning. Doing so will help avoid common pitfalls such as an overly broad scope and a lack of organizational maturity that dilutes focus, or the adoption of a tech solution that seems appropriate in the moment but is not aligned with the long-term strategy, ultimately hindering future growth. The following four principles should be followed for building a successful skill-based organization:

1.??? Align skills to business strategy - Ensure that skills are directly aligned with business strategy. Focus on critical areas where skills are essential, such as recruitment, and begin with a pilot project. This allows for effective and sustainable integration of skills into the broader business strategy before scaling.

2.??? Install a detailed and agile skill taxonomy – Develop or (partially) buy a comprehensive and dynamic skill taxonomy that categorizes and defines all relevant skills. This taxonomy helps assess current capabilities, identify skill gaps, and remain flexible as business needs evolve. External partners such as Eightfold or Workday can provide valuable support in this area.

3.??? Create an integrated tech ecosystem - Implement a seamless technology ecosystem that supports all aspects of skill management, from talent acquisition and development to performance tracking and career progression. The ecosystem should enable real-time insights and data-driven decision-making, ensuring the alignment of skills with business objectives.

4.??? Foster a culture of lifelong- learning - Cultivate a culture that prioritizes skill-first behaviors, enabling employees to engage in self-directed learning and career development. Encourage continuous learning opportunities that help employees grow and adapt to new roles and responsibilities, ensuring long-term success in a rapidly changing workforce landscape.?

Whether companies are just beginning their skill journey or already have experience with skill-based approaches, the time to act is now. The business landscape is transforming at an unprecedented pace, with skill demands undergoing a dramatic shift. Skill management is no longer optional - it is a cornerstone of future success. Proactively embracing and tailoring skill-based approaches to their needs, companies can unlock the full potential of their workforce, position themselves as leaders in shaping the future of work, and secure long-term growth and profitability.

Authors: Dieter Kern, Marcel Bruch, Niklas Frings

Sources: PwC CEO Survey 2024, PwC PoV on Skill-Based Organizations, PwC Workforce of the Future, Strategy& Talent Gap Series, WEF Future of Jobs Report 2025