^{PILLAR 2}
Workforce
capability

PILLAR 2

Workforce capability

Is your organization developing the workforce capabilities it needs to stay competitive?

The challenge is clear. Almost half of executives (48%) expect their organizations’ skills and capabilities requirements to change dramatically over the next five years, with 52% saying that addressing skills gaps is a high priority for their leadership team.

Executives say the biggest barrier to strengthening workforce capability is a lack of talent in the marketplace, a factor that is up five percentage points from last year. Concerns also endure about weak workforce planning, a lack of employee engagement, and poor talent forecasting ability.

As AI-related disruption increases, these areas will be tested like never before. Improving them should be an urgent priority for HR and people functions.

A lack of skilled talent in the market is the top barrier to improving workforce capability

AI is here to stay, but firms need to catch up

AI and digital technology are high on the global business agenda. In our survey, 62% of executives say they are investing, or plan to invest in the next 12 months, in technologies that enable employees to perform more effectively. More than half (55%) say that AI will be critical to enhancing the capabilities of their future workforce. Yet one in five admits that their digital strategies for strengthening their workforce are ineffective.

Almost two-thirds of executives surveyed say that automation and AI will execute repetitive tasks and enable employees to perform more effectively. AI will also measure key workforce metrics such as productivity and engagement.

For 62%, AI will play a key role in helping to identify talent gaps.

Current and planned use of AI

Talent’s perspectives on AI

Executives evidently foresee a fast-growing role for AI in their organizations. But what about employees? Our talent survey reveals that 73% of workers say that AI is already changing how they perform their role, or they expect it to do so in future.

Only about one-third (36%) feel positive about that prospect, recognizing the potential benefits for performance and job satisfaction. Conversely, 63% have negative or mixed feelings.

How AI is affecting employees’ roles

Only about one-third (36%) feel positive about that prospect, recognizing the potential benefits for performance and job satisfaction. Conversely, 63% have negative or mixed feelings.

Talent’s feelings about the impact of AI

Part of the reason may be that the conversation about AI is running ahead of practical steps to support its implementation. Although a strikingly high 67% of employees say their employers have explained how AI will affect their roles, just 48% are sure of how they will use AI overall in the organization. Only 39% say they have received AI-related training. Such a gap leaves too much space for employees’ doubts and concerns to creep in.

If organizations are to implement AI effectively, they need to demonstrate real-time applications of the technology. In some cases, employees may even be ahead of their employers on AI, as Sean Perry suggests.

Keeping up with employees on AI

“Staying on the leading edge of technology is critical for almost every business today.”

Sean Perry, Chief Information Officer at Kelly, knows that technology is key to business success. From a people and talent perspective, AI’s challenges are manifold. A little-discussed aspect is the potential for employees to seek faster progress than businesses can deliver. This is a dynamic that could lead to worker frustration.

The consumerization of IT – where consumers adopt new technology faster than their employers – is a well-established phenomenon. From word processing to smartphone adoption, workers’ expectations of enterprise IT accelerate quickly. When it fails to keep up, frustrations mount.

Given the accessibility of AI to home users, this pattern could re-emerge. “It creates this pressure on the IT organization to stay at the forefront of what’s available,” Perry says.

Sean Perry
Chief Information Officer at Kelly

Insights from the Index:
Laggards are playing AI catch-up

Resilience Leaders are more likely to say they are already investing in technology to enhance performance (40%, compared with 25% of the lowest-scoring businesses).

Interestingly, Laggards are more likely to be planning investment in technology in the next 12 months (42%, compared with 31% of Resilience Leaders). They view technology investments as the key to catching up with the competition.

Resilience Leaders are also particularly likely to create advantage through the effective use of talent management tools or platforms; 78% say this contributes to their workforce capability, compared with just 19% of Laggards. Three other key areas are important to more than two-thirds of Resilience Leaders: leveraging tools to analyze the workforce, to monitor productivity, and to effectively support hybrid work (each 69%).

Yet, while they are using multiple tools effectively to increase workforce capability, Resilience Leaders are not reliant on AI and automation. A comparatively low 57% rate AI and automation as effective, indicating that other tools are—for now—still more important for workforce capability. And while that percentage is higher than among Laggards (35%), it is slightly lower than among the Mid-market Performers (60%).

Building the confidence to use AI

AI challenges everyone to work differently. However, older employees are under particular pressure, as Amy Bouque points out. Leaders should role model and encourage their teams to explore the technology’s potential. “I'm a Gen X-er and I challenge myself every day to get on Copilot or use ChatGPT. I'm asking my team to do the same,” Bouque says.

Amy Bouque
Chief People Officer, Kelly

Strategies for strengthening workforce capabilities

Digital technology also has a key role to play in supporting greater workforce capabilities. Our executive survey shows that more than half of all organizations find a wide range of tools effective. Nevertheless, a substantial minority of 20-25% rates tools ineffective.