Operationalizing a skills-powered organization 

For years, organizations have talked about using skills as the currency of work. And with good reason. A growing body of evidence shows that skills-powered organizations (SPOs) perform better across a range of business outcomes — from improved retention to increased agility and cost efficiency. But for many HR and technology leaders, turning this ambition into operational reality remains an uphill climb.

The business case is clear, and most leaders already see the value. In Mercer’s 2025 Global Talent Trends Study, half of HR leaders identify skills shortages as one of the top threats to their businesses in the year ahead. Among organizations farther along in their journeys toward integrating skills into their talent strategies, 92% report positive business outcomes — from productivity gains to increased agility and engagement. And the 2024–2025 Skills Snapshot Survey observed that nearly 70% of employers have identified the most critical skills for their departments, while about half have established a working skills library.

Where most organizations get stuck is in the operational middle ground. How do you translate strategy into systems? How do you take the architecture you’re building — your skills library, your frameworks — and apply it to everyday decisions about people and work?

In this article, we examine why the shift to skills is gaining urgency, why many companies stall in the implementation phase, and what steps HR and tech leaders can take to break through. Using Mercer’s Infinity Loop for Digital Transformation as a practical lens, we walk through the technology capabilities needed at each stage — strategy, deployment and betterment — and offer a focused, realistic playbook for digitally enabling your skills-powered strategy. 

The shift toward SPOs is no longer relegated to early adopters. Skills-based talent practices are increasingly recognized as a structural advantage for navigating workforce disruption, aligning talent to business strategy and future-proofing the enterprise. Mercer’s 2024–2025 Skills Snapshot found that organizations with integrated skills frameworks experience significantly higher employee retention, and our 2025 Global Talent Trends Study showed that more than 40% of skills-forward organizations are already realizing benefits such as faster talent deployment, improved engagement and better skills transparency.

Real-world evidence supports these insights. The graphic below demonstrates how organizations that embrace skills-powered strategies achieve tangible, measurable business outcomes across productivity, agility, cost savings, employee engagement and profitability.

The benefits of becoming an SPO are clear, but the execution is often anything but straightforward. Companies frequently face significant barriers in translating strategy into practice. Mercer’s 2024–2025 Skills Snapshot highlighted several widespread concerns among HR leaders in this regard, including limited HR capacity or capability (40%), excessive change (38%), lack of funding (30%) and risk of increased costs (30%).  

Properly implemented technology solutions can help mitigate these barriers, expanding HR team capacity through automation, pacing organizational change through staged digital transformation and clearly demonstrating ROI to alleviate stakeholder cost concerns.

Yet digital transformation itself introduces another layer of complexity. Even with substantial investments in technology, many organizations struggle to realize their digital capabilities. When it comes to enabling skills-powered career frameworks with digital solutions, we find the following common challenges:

To move beyond strategy and into sustained execution, organizations must invest in the right digital infrastructure. A successful skills-powered organization creates the systems and experiences that organize, understand, deploy, grow and reward those skills in an integrated, scalable way.

In our Mercer Skills Technology Marketecture, we’ve outlined five essential capabilities that form the digital backbone of any operationalized skills-powered strategy. Each plays a critical role in enabling organizations to put their skills philosophies into practice.

Each stage — Strategy, Deployment and Betterment — offers a structured lens for activating the right digital capabilities at the right time, grounded in the realities of your workforce, architecture and business priorities.

Let’s break them down:

For many organizations, the hardest part of digital transformation is knowing where to begin. The good news is that a skills-powered approach doesn’t require a full-scale overhaul to deliver value. The most effective efforts start small, with targeted, high-impact steps that create momentum and demonstrate ROI early.

Here’s what to focus on first:

As organizations confront mounting talent pressures, skills-powered strategies are moving from aspiration to necessity. The benefits are proven: faster internal mobility, stronger retention, reduced hiring costs and a workforce better aligned with business priorities. But realizing those gains requires more than vision. It demands execution.

Digital transformation makes skills-powered strategies operational at scale. With the right tools and roadmap, HR and technology leaders can embed skills into the everyday fabric of workforce planning, talent development and decision-making — delivering measurable business value at every step.

This work doesn’t need to be perfect or complete to be powerful. Start where you are. Activate what you already own. Choose a meaningful use case, and let it demonstrate the value of the broader vision.