Boyd Davis, CEO Payfederate
Fifteen years ago, the world began to shift its approach to hiring. Credentials—those polished, often expensive, badges of achievement—started losing their dominance as the primary criteria for job roles. Then, in the aftermath of COVID-19, the pace of this transformation picked up dramatically.
In 2021, IBM announced that half of its U.S. roles no longer required a college degree, a journey that began five years earlier. Fast forward to 2023, Deloitte was championing the concept of “Navigating the End of Jobs,” highlighting a monumental shift in how organizations view talent. Skills-based talent management—hiring, developing, and promoting employees based on capabilities rather than credentials—became the buzzword. But as we ride this wave of change, one question lingers: Have we truly made meaningful progress?
The Promise and the Gap in Skills-Based Hiring
Data tells a mixed story. On the one hand, job postings that don’t require a degree have quadrupled. That’s progress. Yet, for every 100 such roles posted, only four additional candidates without degrees were hired. The promise of equitable and skills-focused hiring feels real, but the impact remains muted.
At the heart of this transformation lies the “skills taxonomy,” a comprehensive list of skills that an organization can assess and apply to its workforce. These taxonomies can span hundreds or even thousands of skills, offering organizations an incredible opportunity to match talent to roles more effectively. However, adoption rates remain low. By 2022, only 1 in 10 organizations had implemented a skills taxonomy. Among Payfederate customers, many of whom have a few thousand employees or fewer, the numbers are even lower.
Adopting a skills-based approach comes with its challenges. Identifying the skills required for a role is one hurdle; accurately assessing those skills in candidates and employees is another.
The Missing Link: Skills Journey, Job Architecture, and Equitable Rewards
The shift to skills-based talent management isn’t just about improving job descriptions—it’s about rethinking job architecture as a whole. A well-designed job architecture is essential to support skills-based career journeys. By establishing clear, competency-based career levels and aligning them with skills, organizations can enable employees to see logical growth paths within the company. But this journey must also tie back to a central pillar of organizational fairness: equitable, competitive pay ranges. For skills based compensation management to truly succeed, roles must be rationalized against market benchmarks, ensuring employees are appropriately rewarded for their contributions. Only when job architecture integrates skills, career paths, and fair compensation management can the promise of skills-based talent management reach its full potential.
At Payfederate, this holistic approach is embedded in our mission to empower organizations and their people.
Why It All Starts with Job Descriptions
If you’re reading this, you probably already believe that moving from credential-based hiring to a skills-based model is both equitable and effective. The question isn’t about “why” but “how.” And the answer starts with job descriptions.
Let me be clear: I’ve never subscribed to the idea that jobs will one day be replaced by collections of skills, like recipes with exact measurements. You’re not going to see listings that say, “2 cups of project management, 1 cup of technical communication, 3 tablespoons of team motivation, and a pinch of creativity.”
Instead, job descriptions will evolve. They’ll outline the skills required, responsibilities, and necessary certifications. Truck drivers will still need a CDL. Nurses will still need to pass the NCLEX. Lawyers will still need to pass the bar. These certifications aren’t about signaling; they’re about competence. The real task is ensuring that job descriptions are accurate, well-crafted, and reflect the true needs of the role.
The Role of AI in Modernizing Job Descriptions
Here’s where AI and specifically AI job matching becomes a game-changer. Every customer Payfederate works with starts their journey with some sort of job description challenge. In the worst cases, there are no job descriptions at all—a surprisingly common scenario.
Cleaning up job descriptions is tedious, time-consuming, and often suffers from a lack of clear ownership within organizations. That’s why a purpose-built AI solution can make all the difference. With the right tools, organizations can:
- Normalize job descriptions to create consistency across the board.
- Enable collaboration among teams to ensure input from multiple perspectives.
- Conduct quality audits to ensure descriptions meet organizational standards.
- Enforce policies to keep job descriptions aligned with company guidelines.
Once job descriptions are centralized in a platform, it’s easier to avoid duplicative roles and maintain a consistent quality standard for new postings. Authorship becomes collaborative, and clear job descriptions can seamlessly transform into job postings.
Moreover, if job descriptions emphasize skills, an organization’s broader “skills library” can be extracted and refined. Soft skills—like leadership and communication—can be described with more specificity and consistency as the AI learns from existing descriptions and improves over time.
The Bigger Picture: Empowering Employees and Organizations
A coherent job catalog, complete with accurate, skills-based descriptions, does more than streamline hiring. It lays the foundation for transformational changes across the organization:
- Pay Benchmarking: With a clear understanding of roles and skills, organizations can set fair and competitive compensation.
- Career Pathing: Skills-based job descriptions make it easier to build logical career paths and job architectures.
- Employee Empowerment: When employees see their skills reflected in their roles—and understand the skills required for future roles—they gain a greater sense of control over their careers.
At Payfederate, we understand that skills-based talent management can feel like a daunting journey, especially for organizations without massive HR teams. That’s why we advocate for a practical, step-by-step approach.
Take the First Step with Payfederate
The path to skills based compensation and talent management begins with job descriptions. They are the foundation of hiring, development, and retention strategies. And while this might seem like a small step, it’s the most critical one.
With platforms like Payfederate, you’re not just creating job descriptions—you’re building the infrastructure for a fairer, more effective, and future-ready organization. Today, let’s start with your job descriptions and move forward together.
Check out our latest blog, The Road Ahead in 2025: Key Trends in Enterprise Compensation Management, where we explore the future of enterprise compensation. Learn about the rising significance of salary transparency, the role of AI in compensation strategies, and the need for innovative salary benchmarking approaches.
