The terms appeared everywhere at HR Tech this year: skilling, reskilling, upskilling. As vendors work to quickly develop tools that match employers’ needs, the skills tech market has grown. It is now valued at $1.3 billion, with 97% of vendors reporting that revenue has lifted since 2019, according to the founders of human capital advisory firm RedThread Research.
A related “groundswell of activity” has made recent years overwhelming for HR leaders making tech-buying decisions,” co-founder Stacia Garr said during RedThread’s HR Tech mega session last week on how HR technology fits into skill management, including when and how to make technology investments.
Skills strategy: ‘More complicated than we thought’
“Skills are the language of business,” said Garr, confirming that more business leaders are pushing for skills strategy. This doubles the pressure on human resources professionals to determine how tech fits into the already complex topic.
Despite rising enthusiasm in the market, a surprisingly small number of employees feel engaged with skills strategies at work. Less than 15% of respondents reported that their organization has designed a skills strategy for their entire company, according to RedThread Research.
It turns out that “skills technology is a bit more complicated than we thought,” said Garr. Simply aligning skills with job architecture isn’t enough, because identifying, organizing and verifying competencies remains challenging for many employers.
Garr said this is fundamentally a “good problem for AI to solve,” adding that machine learning has the potential to “fulfill the promise” of skills-first work theories.
Tech vendors and skills strategy
There are six components of a strong skills strategy, based on RedThread’s analysis: scope and purpose, partnership, culture, architecture, data and tech. Can any vendor do all of these things? Garr says no, advising employers to consider skills tech an ecosystem. “It’s hard to know, when someone says they are a skills tech vendor, what that actually means,” she said.
Awareness of skills strategy has become mainstream, and an increasing number of vendors strive to provide AI-driven solutions. According to Garr, there is a substantial amount of activity in the field of skills, and skill technology providers must demonstrate their worth as an integral component of the technology ecosystem. The RedThread team emphasized the significance of data in facilitating the exchange of information among learning, HR, communication, and other systems.
RedThread co-founder Dani Johnson pointed out one community with exceptionally “ripe” potential for skills transformation: the front line. The nature of frontline work lends itself well to applying tech to track skills for compliance, assigning work, inferring skills and coaching. But Johnson says that tech vendors haven’t made a big move to engage HR buyers in this population, at least not yet.
Most vendors are using generative AI to adapt features that already exist within their products, according to RedThread, such as identifying and organizing skills or generating skills taxonomies. Future-facing, generative AI-powered features, as expected by RedThread, will include more transformative functions such as analysis of work, less focus on tenure and the flattening of organizations.
Read more HRE coverage of HR Tech 2023 here.
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