Upskilling the Workforce in the Age of AI: Skill-based vs. Job-based

By Dr. Vic | Oct 28th, 2025 | AI, Employee engagement, Leadership, Management consulting, Organizational development, People management, | 0 Comments

Why skills and upskilling are more important in the age of AI than rigid job-based hiring based on roles, titles, and responsibilities? Upskilling workforce is efficient and productive, but it requires leadership to build a learning culture for employee engagement.

The 2020s has been called the “decade of upskilling” by the World Economic Forum (WEF). It estimates that 44% of worker skills will be “disrupted” in the next five years, while 60% of all workers will need some form of upskilling by 2027.

Upskilling is the process of learning new skills and/or competencies to meet the changing needs of an existing job.

Organizations can outperform the competition by “two to six times in terms of total shareholder value” when all employees – not just tech workers – become “digitally fluent,” according to a McKinsey report. The reports stated that access to tech skills is what separates leaders from laggards in the marketplace. But less than half of candidates currently have the skills needed for the most in-demand positions, per the report.

This article will examine the benefits of upskilling for organizations and individuals, and consider strategies to help your organization’s workforce compete in the age of AI.

Advantages of upskilling the existing workforce

Organizations have two choices when they need to add new skills: Hire new workers or upskill their existing workforce. Of the two, upskilling has several advantages.

Lower cost. Upskilling is significantly less costly than hiring new employees, HR Morning reports. The author writes that the cost of replacing a single employee is between 50% and 200% of annual salary – just considering recruitment cost and lost productivity.

That cost figure does not include factors like the wage premium a candidate with the latest skills is likely to command in the marketplace. Nor does it include the cost of replacing employees who leave voluntarily for career advancement. According to the author, lack of training and development is the single biggest reason organizations lose employees.

Higher engagement. Organizations that invest in upskilling, per a Forbes article, report higher engagement and loyalty in the workforce. And companies that emphasize people development are better at retaining workers, achieve more consistent profits, and are “four times as likely to outperform their competitors financially,” reports McKinsey.

Investing in employees elevates workplace wellbeing by improving the quality of their working lives, which in turn contributes to the bottom line of the organization. When the workforce is proactively learning new skills, it increases a sense of belonging and reduces feelings of stress and burnout.

Build a learning culture. Upskilling is a part of building a learning culture. Organizations that emphasize learning are almost twice as likely to produce innovations, while increasing productivity by 52%, and profits by 17% compared to their competitors, according to Deloitte.

Fostering a learning culture allows the organization to adapt to the constant change brought on by AI. It builds flexibility, growth, and improvement into the organization’s DNA. Putting growth and development at the core of organizational values is critical In times of change and disruption.

Upskilling strategies

Here are suggestions to make upskilling an integral part of your organization’s culture:

Create a strategic plan. Begin the upskilling journey with a plan. Several key factors were suggested by McKinsey:

Identify and prioritize key skills. Trying to upskill every function is impractical. Begin by identifying the most strategically important areas to focus upskilling efforts.
Build support in the organization. Work with team leaders and their teams to develop solutions that work in their environments. Test solutions with pilot projects, involve team members to develop ownership, and support their effort.
Develop and iterate quickly. Work with outside providers and partners, including local colleges and universities, to develop learning materials. Monitor the results to find out what is working and what needs to be revised.
Emphasize the learner’s experience. Integrate learning into work and empower employees to take charge of their upskilling experience. Making “micro-learning” experiences and webinars available on demand is a good starting point.
Link learning with career development. Finally, link upskilling with annual productivity goals, career advancement, and other incentives. Employers must ensure that managers provide time and support for upskilling and encourage them to become teachers and mentors for their team members.

The future of learning isn’t about piling on extra training. It’s about redesigning work so that learning happens naturally while doing the job. In this approach, learning isn’t something separate — it’s built into daily work, ongoing, personalized, and clearly linked to real business results.

Develop a skills-based approach. A second way to boost both upskilling and opportunity is to take a skills-based approach to hiring and career advancement. Rather than focusing on traditional jobs, a skills-based approach considers the individual skills needed to perform specific tasks.

The traditional job-based hiring with specific roles, titles, and responsibilities is rigid, since it was created for a “static organizational structure”, per WEF’s 2025 Future of Jobs report. The new skills-based hiring and development of existing workforces leverages the specific skills of each individual employee, Deloitte reports.

The flexibility of the skills-based approach makes it possible to develop the natural talents of individual employees, whether or not they fit into a pre-existing job category. The skills-based approach also opens opportunities to non-traditional candidates who may lack four year degrees or other credentials.

To implement a skills-based approach, organizations will need to develop a “skills framework” – or inventory of skills needed and skills available in the workforce. The skills network can be used to identify both skills gaps and candidates likely to be a good fit for upskilling.

Organizations that implement a skills-based approach to hiring and advancement achieve better performance and have made fewer hiring mistakes than traditional methods, according to Forbes.

When it comes to leadership however, a mere upskilling of leaders in the traditional sense will not be sufficient. To ensure leadership excellence that yields high employee engagement, productivity, and a culture where people want to stay, the development of self and with that of self-competencies for leaders will make or break the organization of the future.

If you would like to learn more about upskilling in the age of AI, please contact us.