Workday released "The Global State of Skills" report, highlighting growing concerns among business leaders about future talent shortages. More than half of leaders worry about having the necessary workforce skills, while only 32% feel confident their organizations are prepared for long-term success. Traditional hiring methods based on job titles and degrees are proving inadequate, leading to a shift toward skills-based talent strategies that prioritize individual capabilities.

The report finds that 81% of leaders believe skills-based approaches drive productivity, innovation, and agility. More than half of organizations have already started transitioning to this model, with 23% planning to begin this year. Beyond business benefits, skills-based hiring is seen as a way to improve job access, workforce equity, and reduce unemployment.

AI is playing a crucial role in this transition by automating tasks, enhancing decision-making, personalizing learning programs, and predicting future skills needs. However, while AI-driven technical skills are in demand, human skills such as communication, teamwork, resilience, and creativity remain essential.

Despite the momentum, challenges include the time needed to reskill employees, resistance to change, and a lack of infrastructure to support skills-based talent management. Leaders emphasize that technology alone isn't enough—effective change management and clear communication are needed for adoption.

Workday believes organizations that embrace a skills-first mindset will be better positioned for success, leveraging AI while ensuring human talent remains a key driver of business growth. The study was based on responses from 2,300 business leaders across North America, EMEA, and Asia-Pacific.