Latest / C-Suite Perspectives / Why Skills, Not Headcount, Matter Most to HR in 2026

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Why Skills, Not Headcount, Matter Most to HR in 2026 · C-Suite Perspectives

• 0:00
  Welcome to C-Suite Perspectives, a signature series by The Conference Board.
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  I'm Steve Odland from The Conference Board and the host of this podcast series.
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  And in today's conversation, we're going to discuss The Conference
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  Board's latest survey, the C-Suite Outlook for 2026, and specifically
• 0:16
  the implications for human capital.
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  C-Suite Outlook survey was carried out in the latter part of 2025 with more
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  than 1,700 C-Suite executives, including over 770 CEOs from around the world.
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  And this is the 27th annual survey conducted by The Conference
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  Board—so great longevity.
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  And joining me to discuss all of this is Diana Scott, who heads
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  our US Human Capital Center.
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  Diana, welcome.
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  Thank you, Steve.
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  I'm happy to be here.
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  So Diane, lots of CEOs, lots of CHROs participated in this
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  survey, and what did they tell us?
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  I'm very concerned about labor markets, as that's my area of specialty,
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  so I'll jump right into that one.
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  And CEOs talked a lot about their critical labor market challenges in
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  2026, and what they said was, we know that they said, globally, uncertainty
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  is one of the defining challenges.
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  And in terms of labor markets, they said that, internally, they're really
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  concerned about finding qualified workers.
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  In fact, that came up as a challenge for 37% of them, and that was closely
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  followed by the lack of in-demand skills.
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  So if you look at those two things, think of them collectively, what that
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  tells me is they're really talking about a mismatch of not just finding people,
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  but they really are thinking about, how do I find the right capabilities
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  at the right speed, at the right time?
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  Because it's finding qualified workers, but also finding the right skills.
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  Let's just drill on that for a second.
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  cause this is the 27th time we've done this.
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  Just a few years ago, in COVID, the whole labor market crashed,
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  everybody was sent home, and so forth.
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  And then coming out of that.
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  It was a labor shortage.
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  It was the Great Resignation and all that.
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  And then that kind of stabilized a little bit.
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  So this is truly different in that they're now saying, OK, there's not a plentiful
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  labor market, or the issue is skills.
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  It's matching what we need to what's there.
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  That's a different message, isn't it?
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  It is absolutely a different message.
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  This is not about finding people or finding workers.
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  This is about finding the right workers who have the right skills.
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  And that is a very different thing coming out of this.
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  I think there are some other things that came out of this survey, as well.
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  If you look at it, there are some real tightness in critical roles.
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  There are also some demographic pressures if you look around the world.
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  I think there are aging workforces, there is shrinking labor participation,
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  if you look around the world.
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  And then we did see some wage pressures in some specialized roles, and I think
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  we can talk about that later on, as well.
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  But the real, absolute big issue is this issue around finding the right
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  capabilities and the right skill sets.
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  And that is very different.
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  Yeah.
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  And we've heard over the past year that CEOs are hanging on their people.
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  It was skills banking, essentially, because when they came out
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  of COVID, they couldn't find anyone, everybody's quitting.
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  So it's like, OK, well, we're just going to just hold on to everybody.
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  You see a little bit of a loosening in that, but not a lot.
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  But the difference this time is they're looking for the right skills.
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  They're not just going out and hiring like crazy.
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  So the hiring is slowed, but it's the skill set.
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  Now, there are labor shortages across different regions.
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  Talk about regional differences.
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  Sure.
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  I think Europe and North America, they're definitely facing an aging population.
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  And I think the biggest issue they're going to be facing
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  is some tighter immigration pipelines, for different reasons.
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  I mean, in Europe, there are always immigration issues in
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  terms of who's allowed in.
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  And in North America, we know there's going to be some tightening around
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  immigration because of some of the different visa issues that we're seeing.
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  So that's an issue for North America and Europe.
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  I think in Asia, what we're seeing is less labor supply.
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  And there's skills alignment issues, especially around AI and digital adoption.
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  So they have had such rapid technology adoption that we're
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  seeing skill gaps there, even though there's a tremendous amount of
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  skills available in those regions.
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  But there's still a skills gap because the need is rising so high,
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  but the skills aren't coming along educationally at the same rate.
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  So that's going to be an issue for them in the Asia-Pacific region.
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  One of the things that we see specifically is in Japan, where they
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  have a unique situation demographically.
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  They have an aging population, so that's a top concern for them.
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  In particular, 36% of the CEOs there said their aging population is a huge concern
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  for them, and that's something that they're going to have to be looking at.
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  Now an overlay to all this.
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  So there's the skills issue as you've articulated, but
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  the overlay to all this is AI.
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  And so, it's not skills in a vacuum.
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  It's skills in shifting sands, as AI comes into the workplace
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  and people try to deal with that.
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  Talk about the impact and the needs from a skill standpoint on AI, and
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  then we'll talk about AI more broadly.
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  Well, as I said at the beginning, we know that finding the right capabilities
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  at the right speed is the big issue, and CEOs are consistently ranking
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  skills gaps alongside hiring difficulty as the top internal constraints.
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  So the AI disruption that's coming, or that is already here, I should
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  say, is the top technological downside risk globally, if you think about it.
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  That came in at 30.3%, and that really is a reflection of the concern that
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  people have around readiness and skills.
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  So productivity loss, really, when you think about it, comes from misaligned
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  skills and not headcount shortages.
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  It's that thing that we were talking about earlier.
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  We have plenty of people who can work.
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  We don't necessarily have the right skills for them to do the work.
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  And if you think about what skills we actually lead need right now,
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  those skills are certainly digital literacy, but they're also other skills.
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  Things like change management, critical thinking, leadership are
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  super-relevant when it comes to driving productivity in this age of AI.
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  And that's something that we're going to have to really focus on going forward.
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  And CEOs are very concerned about that.
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  Yeah.
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  Now, AI generally has changed a lot.
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  A few years ago, nobody could spell AI.
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  It was brand new, it was this mystery thing.
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  Last year, the biggest concern was, how do I invest enough, fast enough?
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  And they were throwing money at it because they didn't know where it was going, they
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  didn't know how to apply it, but they sure as heck didn't want to fall behind.
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  This year, the differences in AI is, OK, we need some ROI on that.
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  And so you start to hear about layoffs related to AI, and AI's going to take
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  all the jobs, and then, that's not necessarily proving to be the case.
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  It's more a matter of making sure that you got enough money to pay for AI.
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  So, all of this dynamic is tied up in the human capital world.
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  And so talk about what everybody's telling us.
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  Specifically, automation and AI is really reshaping labor demand.
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  And therefore, it's shaping the HR priorities, because AI is
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  actually reconfiguring work rather than replacing the jobs outright.
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  And I think that's very important.
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  The HR focus is shifting from the workforce size to the workforce
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  capability, and I think that's an important distinction.
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  Automation and AI can maybe change, you can lose jobs.
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  You actually still need people who can do different things.
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  You need different capabilities now.
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  So there's increased demand for things like judgment, perhaps.
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  Ethics, leadership, learning agility.
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  You also need to think very carefully about digital and data literacy, change
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  management skills within the organization.
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  And HR is going to play a really central role in workforce
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  planning and skills intelligence.
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  So the HR organization really needs to step up now in order to help drive this
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  kind of change through the organization.
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  Yeah, and it's not about layoffs, the AI's just going to take everybody's jobs.
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  I mean, there will be jobs lost, as there is automation and all the deployment of
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  AI, but it then frees up human capital to do more productive higher-order work.
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  That's what I hear you saying, number one.
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  Right.
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  There's also job creation around AI, cause everybody needs an AI expert, and
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  you've got to figure out how to deploy it.
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  And of course, there's the whole AI industry that is booming.
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  So, at an economy level, it is really a job gain, rather than a job loss.
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  But within a company, this isn't like rolling out Microsoft Office or Zoom.
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  It's not about, oh, here's an app, let's train people on it.
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  This is fundamentally a game-changer in the sense that it will help people create.
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  There's agentic AI, it'll help take over some of that and
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  automate customer interface.
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  It really impacts so many different jobs.
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  And when you start talking about skill set mismatches, again,
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  it's not just a static world.
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  It's also in this dynamic world of trying to find those skills that
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  best marry with the needs that now are created by AI implementation.
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  And you brought up a really good point, because it's not just about
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  the skills mismatched, it's also about how the work gets done.
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  So it's really transformative, and I think that gets to workflow, it
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  gets to how things are organized.
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  Not only the types of jobs, but also how people work together.
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  And that gets to organizational dynamics, which is why this is much,
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  much bigger than, as you said, than just, OK, you're going to go from
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  this job to this job, or you have to learn this skill to this skill.
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  Which is why it makes it so much more important that people understand
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  how to lead through that kind of transformative change, how people need
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  to understand how to guide that change.
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  People need to be able to critically think about, well, how are we going to change
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  the processes by which we actually work?
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  This is much, much bigger than any kind of change organizations have really
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  gone through in the past, and it's going to flip things basically upside down.
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  Yeah.
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  And your comment on HR's role in this is different.
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  I mean, it's not just, OK, HR go out and source some people who
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  understand what AI is all about.
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  This is about almost redoing every job description in the company that takes
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  into account the skills that will be automated, but then the new kinds of
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  skills that will be required in order to facilitate the implementation of AI.
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  They aren't the same thing.
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  So if you had a customer service job before, and someone was good at
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  being on the phone and doing this.
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  Now it's a different role because AI takes some of that.
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  And so, there's higher-order work being done, different skill sets.
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  It really is a strategic shift and a big burden, but also a big
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  opportunity for human capital folks.
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  Exactly.
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  Yeah.
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  OK.
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  So, productivity came out in the survey as a big area for both CEOs and CHROs.
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  AI hopefully will contribute to that.
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  But what did we hear beyond that?
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  Well, we did hear that productivity ranks first among human capital
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  priorities for CEOs, it was at over 27%, and that was ahead of flexibility
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  and well-being, which is interesting cause we know that many employees have
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  also really pushed for flexibility.
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  We've had a lot of return-to-office discussions, you and I, and
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  what does that really mean?
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  I think that flexibility is kind of table stakes at this point.
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  We've gone way beyond that conversation, and I think that productivity is really
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  dependent so much on leadership and skills development, on getting effective
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  managers that can enable teams to adopt new tools and new ways of working.
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  CEOs recognize that, and that's where they want people to focus,
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  and so that's why it's their number one area of focus for human capital.
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  I get it.
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  I understand.
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  Makes sense.
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  All right, listen, we're talking about The Conference Board's latest survey,
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  which is the C-Suite Outlook for 2026.
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  We're going to take a short break and be right back.
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  Welcome back to C-Suite Perspectives.
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  I'm your host, Steve Odland, from The Conference Board, and I'm joined today
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  by Diana Scott, the leader of our Human Capital Center at The Conference Board.
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  OK, so Diana, we were talking about before the break all of the issues
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  around productivity and AI and so forth.
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  In order to effect that, CHROs need to deliver and implement change
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  management and transformation.
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  And so it makes sense that they would prioritize that a little higher
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  than CEOs cause they're thinking about the implementation side of it.
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  Talk about what we heard from both CEOs and CHROs on
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  organizational transformation.
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  That was interesting because CHROs ranked organizational transformation 23% in terms
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  of their priorities, and CEOs ranked it at 17%, so much higher for the CHROs.
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  I wasn't actually surprised by that cause I think HR leaders really
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  experienced firsthand the impact that maybe outdated structures can block the
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  ability to effect that kind of change.
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  And if you're talking about being able to deploy new skills and get
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  the organization to adopt AI to adopt new ways of working, I think the HR
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  organization is the one that experiences it firsthand when those challenges exist.
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  And perhaps the CEO is just saying, you just need to go get it done.
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  So I think the CHRO's really, really focused on the execution challenges
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  of that transformation much more directly than perhaps the CEO.
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  They also understand that that transformation really is necessary
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  because it's going to affect the culture, it's going to affect
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  how they structure incentives.
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  They have to think about roles and responsibilities.
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  They have to think about the leadership it's going to take.
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  It's a lot of work, and they know that it's really, really important
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  to do that in order to get the right outcome, which I think is to
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  deliver the kind of productivity that the CEOs are prioritizing.
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  The two are inextricably linked, in my mind.
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  Yeah.
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  We often joke that the HR function has more buzzwords than any other function.
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  One of those popular ones recently has been agile organizations.
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  But it's really true.
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  I mean, in this world where everything is changing, you do need the ability of the
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  people in the organization to respond.
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  If people go, oh no, I can't do that.
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  Can't's a four-letter word, but I can't do that, or I won't do
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  that, another four-letter word.
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  You're stuck.
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  And then you're having to rip people out and yeah, it's a mess.
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  It's the adaptability, the capabilities around adaptability
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  and agility, that really is important in this period of time.
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  And we heard that in the survey.
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  We absolutely did.
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  Think about flatter structures, which is something that HR people talk a lot
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  about, is if you can develop a flatter structure that's going to improve speed,
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  decision making, there's one example.
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  So that's something that can be organizationally transformational.
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  That may be a buzzword that HR people use, but it actually is
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  something that's very important.
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  So things like that are something that a CHRO is going to be
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  looking at very closely as just one way to help the organization
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  transform and improve productivity.
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  Skills pathways are going to be really important.
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  So how do we do that?
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  How do we get people to learn new skills so that we can redeploy that talent?
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  That's another buzzword.
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  Skills redeployment, right?
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  Skills pathways and redeployment.
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  But those are really important things, again, so that we can get to more quickly,
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  more agile, adaptable organization that can get us to greater productivity.
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  And then I think another thing that we talk about a lot in the HR world
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  that is real is the intangibles.
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  Creating that trust, creating an environment of psychological safety that
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  is going to help foster the learning and the innovation that we're looking for.
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  Which is really important when you're going through this kind
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  of change in an organization.
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  And that's something that will require that leaders think
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  about as they're guiding their teams through an organization.
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  It is something that the HR organization can actually help guide the leaders,
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  as well as train managers and frontline leaders, to help their
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  employees through this process.
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  Agile models, if we want to use that word, really do help reduce
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  some of the resistance to change.
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  So it does work.
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  Even if you don't like the buzzwords.
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  Yeah, I mean, well, we joke about it, but they're there for a reason.
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  There's also a gap here, a little bit between CEOs and
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  CHROs on workforce change.
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  We were talking about the gap in terms of organizational transformation.
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  So maybe workforce change is part of that, but what did we hear there?
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  We talked about it earlier.
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  CEOs are very focused on productivity and growth, and I would call
• 19:01
  those the outcomes, and CEOs should be focused on outcomes.
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  The HR organization and the CHROs are really emphasizing capabilities
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  and culture, in that they are thinking about the enablers, which
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  is sort of how do we get there?
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  So they're thinking about, how do I help the CEO get to the
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  outcomes that they want to get to?
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  That's kind of the way I look at it, and I don't see that as a gap, then.
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  I see the CHRO is really helping the CEO get to the goal that they
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  want, which is greater productivity, which is going to help drive growth.
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  Yeah, and it's not that the CHROs don't want returns and everything.
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  I mean, you have to deal with all of your constituents, customers, employees,
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  owners, environment, and so forth.
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  And it's really the job of the C-Suite, not just the CEO, to make sure that the
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  companies have all of that in balance.
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  The CHROs are part of that C-Suite that help to deliver that.
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  So, it's not a point of friction, it's just a point of emphasis.
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  Whereas the CEO is looking more externally, the CHRO
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  is looking more internally.
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  So I just want to highlight that what we're talking about is not
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  a material difference of opinion.
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  it's just the context of the focus.
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  I totally agree.
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  It is not a gap.
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  It is just a partnership, and in terms of the roles that each of
• 20:27
  them play, in terms of getting to the end result that they both want.
• 20:34
  Yeah, and it's really important that we understand, but each member of
• 20:37
  the C-Suite need to be sensitive to the primary focus from the other
• 20:44
  colleagues on which constituent.
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  Cause they're collectively responsible for delivering in balance for all of them.
• 20:51
  Just pivoting here, what are some of the traditional levers that are receiving
• 20:56
  more emphasis from CHROs, less from CEOs?
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  There are definitely some policy levers.
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  I brought up immigration earlier.
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  That's going to be something that CHROs are going to be looking at in terms of
• 21:08
  how that might impact access to labor.
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  And that varies depending on where you are in the world, obviously.
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  Regulatory fragmentation, I think, is going to be something that
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  CHROs are going to have to look at.
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  Again, around the world, it's going to differ globally.
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  That's going to probably put some strain and competition on skilled labor,
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  as we're looking at skilled labor.
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  There might be some governance issues around AI, globally, I think we can all
• 21:41
  probably predict where that might happen.
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  And so maybe some public policy shifts will create some governance risk there.
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  So we'll have to look at that.
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  And then I think, with the rise of AI, I've heard increasing chatter
• 21:59
  and conversation around what kinds of partnerships are we going to need
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  longer term, sort of the public-private partnership concept of governments
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  and educators and corporations, to really think about what are the future
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  skills that we are going to need as we continue to evolve, and need these
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  evolving skills, technology skills.
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  And I think that's going to be an interesting discussion going forward.
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  Yeah, it really is.
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  And technology skills used to be, oh, can you program something?
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  And now it's more, how do you implement AI into work processes,
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  and what does that mean?
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  Again, it goes back to where you started, in your comments that CHROs
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  really are at the nexus of trying to figure out these changing skill
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  needs and what to do about it, right?
• 22:51
  Exactly.
• 22:52
  Yeah.
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  I think one thing that we have seen consistent in our surveys over the years,
• 22:57
  that the CEOs really do believe that human capital is the differentiator,
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  the core enabler for their organization, the differentiator with their customers,
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  the importance for their owners in terms of delivering a return.
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  And it all comes back to people.
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  And that sounds trite, but it couldn't be more apt today than ever before.
• 23:20
  I absolutely agree, and we know that for decades, people have always risen
• 23:26
  to the top as a primary concern.
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  How do I find the right talent, and that can deliver the service and the
• 23:34
  products that I need to deliver to my customers and my constituents?
• 23:39
  So it's no different this year than any previous year.
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  It's still a concern.
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  It's just a different flavor, a very different flavor this
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  year, as we've discovered.
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  But it's still the same issue.
• 23:51
  We have to make sure that we can find the right people who
• 23:54
  can deliver to our customers.
• 23:57
  Diana, you've been a CHRO in several organizations, large
• 24:01
  insurance organizations.
• 24:03
  You've been watching this space and participating in it,
• 24:06
  a player in it for decades.
• 24:08
  Anything about this survey surprise you?
• 24:12
  it was what I expected.
• 24:15
  Probably, there were slight things that came out.
• 24:18
  But again, as I thought about them, they were explainable to me.
• 24:22
  So, for example, I think we had a whole conversation about the
• 24:26
  fact that well-being was at the bottom in terms of a concern.
• 24:32
  But mental health rose to the top as a major concern of for CEOs.
• 24:37
  And we were talking about, was there a disconnect there?
• 24:41
  After reflection upon reflection, I thought, well, actually no, because I
• 24:46
  think well-being is kind of embedded in a lot of the work that most
• 24:51
  organizations are doing right now.
• 24:53
  In terms of thinking about productivity and skill building and leadership
• 25:00
  building and culture, the investments that they're making in all of
• 25:04
  those areas in their organizations.
• 25:06
  But with a lot of the issues that have been happening both societally,
• 25:13
  geopolitically, all the uncertainty and the complexity of the world we
• 25:17
  live in today, there have been a lot of mental health challenges.
• 25:21
  And it's very much come to the forefront.
• 25:24
  And it hasn't been necessarily anything that's been caused by
• 25:28
  what's happening in the workplace.
• 25:30
  But those mental health challenges have been very prominent in the news.
• 25:33
  And so I think CEOs, it's not surprising to me that CEOs have
• 25:37
  said mental health is a concern that they have for their employees.
• 25:42
  And they are thinking about how they can create an environment where they
• 25:47
  are at least aware of it and make sure that they're addressing that.
• 25:50
  So things like trust, psychological safety, making sure their leaders, their
• 25:55
  frontline managers are paying attention to that, are important issues for them.
• 26:00
  That's never come to the forefront before.
• 26:02
  So that was a little surprising to me.
• 26:06
  Yeah, mental health is, I guess you could consider it as a portion of well-being.
• 26:10
  But I think what we're hearing is OK, it's not well-being in general, it's.
• 26:13
  We really got to deal with this issue before us.
• 26:16
  It's like they say in Florida, you don't have to worry about the group of
• 26:18
  alligators, just the one closest to you.
• 26:20
  And mental health seems to be that alligator today where you just
• 26:23
  have a lot of it coming into the office from the outside environment.
• 26:26
  And you can't just turn a blind eye to it.
• 26:28
  You have to deal with it every day, cause it's part and parcel to your culture
• 26:32
  and your community inside the company.
• 26:35
  Absolutely.
• 26:36
  Yeah.
• 26:36
  So that's something that I think came out of this particular survey this year that
• 26:43
  we need to really think about and address.
• 26:45
  And companies should pay attention to.
• 26:48
  Yeah.
• 26:48
  Any final closing thoughts?
• 26:50
  I just think it's another year that we need to focus
• 26:54
  on change and transformation.
• 26:58
  I think the uncertainty and the complexity of what we are facing in the world
• 27:02
  today requires that we really think about how to navigate through that.
• 27:09
  And it's going to require that we invest in change, invest in our people, and
• 27:17
  really make sure that we're giving leaders, in particular, what they
• 27:22
  need to pull the organization through this change and transformation.
• 27:28
  Yeah, absolutely right.
• 27:30
  And you know words of wisdom.
• 27:31
  it's a new year upon us, and lots of opportunities ahead of us.
• 27:35
  Diana Scott, thanks for being with us today and sharing your insights.
• 27:40
  You're very welcome.
• 27:41
  And thanks to all of you for listening to C-Suite Perspectives.
• 27:44
  I'm Steve Odland, and this series has been brought to you by The Conference Board.