Hello. I'm Brian Fisher. And today I'm joined by Peter Stevenson. Peter, it's been about a year since Mercer published our point of view on advancing skill-based practices. And in a blink of an eye, here we are. You've lived it alongside of me. What did you experience in the past year?
Yeah. Thanks, Brian. Well, after more client conversations than I can count, we know that despite almost universal prioritization of skills amongst both leaders and employees, companies have approached the topic in very different ways and are typically at different points in their various journeys.
So our Global Talent Trends study indicates that reskilling is the top priority among business executives because they see reskilling as pivotal to transformation efforts. Added to this, HR's number two priority is establishing skills-based practices since they see that as being a key lever in attracting and retaining talent.
And in our recent Pay for Skills survey, we saw that at well over 600 responding companies, more than half said that their leadership view skills-based pay as important or very important for ensuring optimal compensation plans in their companies versus just 4% who say it is not important at all.
So, yes, skills are a high priority across the board right now. Brian, you're talking to clients every day. What are you hearing, and what are they asking you about?
Oh, yeah, thanks, Peter. It's really, I guess, to distill it down, maybe three camps here. One is clients will come to us and ask me about a pressing need for skills in a specific team or area. Oftentimes it's an attraction or retention issue or critical talent or it's unlocking workforce agility through talent mobility both job to job or with gigs and projects but for a specific team or area.
In the second camp, we do have employers trying to make enterprise-wide advancements. And a good example of that is the growth of talent marketplace platforms, talent intelligence platforms like Eightfold and Gloat. And by the way, we co-authored an article on this topic with Eightfold last winter.
And the third camp is just getting started. Clients are just trying to figure out where to get started with skills. And I partnered with a group of US-based consultants on an article last year actually entitled Getting Started with Skills.
But across all of these camps, new data and products are really valuable for employers. Now, Peter, I know our products are evolving with client needs. In fact, each of our products has multiple versions rolled out in the past year. Tell me more about that.
Yeah, absolutely. Each of the three Skills-Edge tools that hit the market last year have been enhanced as we continuously iterate on them. So if you only saw the product last summer, I'd recommend that you take another look to check out all the new content and features.
But, Brian, you talked about companies that are taking their first steps and wanting to lay the foundations for getting smarter about skills. For those companies taking their first steps, the first question is usually, how do I make a skills taxonomy?
All our data tells us that this is where about half of all multinational companies are right now in their skills journey, at the taxonomy creation stage. So a skills taxonomy is the starting point, the baseline for pretty much all skills use cases.
What do we mean by skills taxonomy? Well, a skills taxonomy is essentially a skills framework. Typically, it's going to be aligned with your company global job catalog. When you know which skills are needed for each job, the foundation for skills-based talent strategies is in place.
But creating a skills taxonomy is not quite as simple as it maybe sounds. It can honestly be quite a big lift as we at Mercer have experienced. So for companies that are at this stage, Skills Library is the perfect tool for that because it provides a shortcut to a fully curated skills taxonomy which is aligned to your jobs. And that's foundational for the vast majority of skills use cases.
But for the clients that already have a full or partial taxonomy in place, maybe they're ready to take bigger steps into skills-based strategies. Well, you need data to do that. And our Skills Library enables a company to keep their skills data current and complete.
For some of the more skills-mature organizations that have already made good progression on the skills taxonomy, many of them are now leveraging that foundation to experiment with pay for skills. Often they're focusing on a specific team or area. And their increasing emphasis on pay for skills in their compensation programs. And we outline the market practice on this topic in our skills survey and our pay for skills article earlier this year.
And improved data is making pay for skills a reality. Our Skills Pricer tool applies advanced analytics and regression to our world-leading salary data overlaid with our partners' real-time labor demand data to provide skill pricing and guidance on which skills are most valuable to your company when rewarding, attracting, retaining, and upskilling talent.
It also enables users to create custom roles which reflect your organization's unique skills mix within a role and understand how that impacts upon pay. Last but not least, some of the most skills-mature companies are starting to ask, how can we incorporate skills data into our talent and reward strategies? How can I use skills data in my year-end and merit cycle to reward and retain employees with the skills I need?
So this is where the final tool, Pay Planner, comes in. Pay Planner is-an AI driven tool which provides salary increase recommendations that help ease decisions about how to reward your employees as well as incorporating traditional data points, such as employee performance, pay competitiveness, also career potential.
The algorithm incorporates skills criticality data to bring a skills lens to the pay recommendation process while helping to make manager decisions more data-driven. So at Mercer, we've definitely leaned into deploying new technology, including AI in our products. Ryan, to what extent would you say employers are applying AI to their processes?
Oh, yeah, well, I think it's great that we've been really leveraging the power of AI because AI has really transformed the HR technology landscape, and the HR tech landscape is booming. And astute employers? They're benefiting.
In our Global Talent Trends survey, we asked HR how they are employing AI in HR processes. And broadly speaking, AI is being applied to vast data sets, both internal and external, that are available today. And there's plenty of data to be had from applicant tracking systems, learning management systems, internal and external worker profiles, job boards. The list goes on.
But the key is how to harness the power of that data for your needs. And according to our Global Talent Trends survey, the three fastest-growing uses of AI are first to track the changing demand and value for different skills. This is oftentimes supporting workforce planning and pay for skill efforts.
Number two, improving internal talent management. This is frequently including nudges to employees to support career choices and to leaders to support workers at key milestones or moments that matter. And talent mobility is being achieved by establishing AI-supported talent marketplaces similar to the talent marketplace in the talent marketplace article that I referenced early.
Third is they're adding talent intelligence to the external hiring processes, including redefining talent supply pools and improving the selection process through AI. Now, while some employers and some of us are still using artificial intelligence in future terms, when discussing future plans, the reality is AI is here, and it's present.
Read a different way, when you look at this data within the Global Talent Trends survey, looking at the small percentage of employers that are not using AI in these areas, you've got to ask yourself, if you're not using AI across HR processes by this time next year, why not? We have a lot to say about skill-based practices. And so you'll be hearing a lot more from us throughout the year.
Yeah, that's right. We plan to use this platform to share our experiences with you throughout the year. The next installments that we anticipate, these are going to include a spotlight on skills-enabled career frameworks. We share client stories about how companies are deploying pay for skills within their organizations and, towards the end of the year, do a deeper dive feature on talent intelligence engines in the talent marketplace.
Yeah, sounds like busy times for us, but we know it's even busier times for employers. Our research suggests that employee exhaustion is at an all-time high. But with transformation around us, there's no rest for the weary. I'm looking forward to the exciting times ahead and sharing our experiences on our next installment.
