AI, Skills Gaps & Retention: How to Hire Top Talent in 2025

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AI, SKILLS GAPS, & RETENTION: HOW TO HIRE TOP TALENT IN 2025

Hiring is in crisis: AI is redefining recruitment, skills gaps are widening, and employees are demanding more than just a paycheck – they want growth, mobility, and purpose. And it’s up to you to deliver it. 

The numbers don’t lie – hiring is facing a reckoning.

📉 40% of talent specialists worry AI is making hiring too impersonal.
🤖 67% say AI usage in hiring will dominate recruitment strategies in 2025.
📈 50% of employees planning to stay say career growth is the only reason they’re staying put.

For HR and talent acquisition (TA) leaders, hiring in 2025 needs a strategic overhaul. It isn’t just about filling open roles – it’s about building a resilient, future-ready workforce.

How can TA leaders balance automation and human connection, rethink outdated hiring models, and build talent strategies that last? Read on to find out.

Inside this edition

• How AI is reshaping hiring – and how to preserve the human touch

• Why skills-first hiring is key to closing talent gaps

• How career growth and internal mobility drive retention

• The hiring strategies top companies are using to stay ahead

Plus: A free Cutting-Edge Talent Acquisition Checklist to future-proof your hiring strategy 🎁

🗞️ In case you missed it: Companies doubling down on DEI, the fate of the federal workforce (spoiler alert: it’s not good), and the state of tech jobs in January.

Read on to get a head start on the trends that will shape hiring in 2025…

SPREAD FOR YOU
📢  3 TALENT ACQUISITION TRENDS TO WATCH IN 2025

From Unilever’s FLEX Experiences platform to Home Depot’s leader-driven career pathways, discover how you can use proven strategies to navigate an AI-driven future.

Let’s face it: Hiring isn’t the same as it used to be a year or even six months ago. What’s to blame? A volatile market, AI advancements, and shifting expectations, to name a few. 

It’s clear traditional recruitment models no longer cut it – and companies that continue to use outdated methods are at risk of falling behind, in an era where everyone is struggling just to keep up.

Hiring in 2025 requires a new playbook. The secret ingredient? Staying ahead of emerging trends and building a hiring strategy that’s ready to adapt at a moment’s notice. 

We’ve got the three critical trends you need to keep up. 

AI & automation in hiring: Is it really smarter?

You know by now that AI is transforming recruitment – in fact, 67% of TA professionals say it will be a top trend in 2025, according to Korn Ferry – but buyer beware: Leaning too much on AI in the process comes with its risks.

According to ResumeBuilder, 83% of companies plan to use AI to screen resumes, and 21% automatically reject candidates without human review at all recruitment stages – and 50% automatically reject candidates without oversight during the initial screening stages. 

If you think that sounds like a surefire way to overlook top candidates, you’d be right.

In an interview with the Wall Street Journal, Harvard Business School’s Joseph Fuller gave two shocking examples:

• A hospital only accepted candidates who had computer programming experience on their resume. The kicker? All the role required was entering patient data into a computer.

• A company hiring for a retail role rejected candidates who didn’t have “floor-buffing” as one of their skills, even if the rest of the resume met all the criteria.

Bottom line: Don’t take the human out of hiring. Here are some questions to ask to help make decisions about when AI should – and shouldn’t – be used in hiring:

• Is AI improving efficiency without eliminating top talent?

• Is AI accurately assessing job-relevant skills rather than filtering based on rigid keywords?

• Are we regularly auditing AI-generated shortlists to ensure quality and fairness?

• Are hiring managers trained to interpret AI-generated insights without over-relying on automation?

• Are AI-generated responses clear, accurate, and aligned with our employer brand?

• Do candidates have an option to request human interaction at any stage?

Skills-first hiring: Ditching degree requirements for experience

Job titles are becoming obsolete. Whether or not a candidate has been in the “right” sounding role isn’t relevant anymore – companies are all-in on skills to fill critical gaps and expand their talent pool. 

The trend has been steadily rising in recent years. In 2024, 81% of companies globally used skills-based hiring – compared to 73% in 2023 and 56% in 2022, according to a TestGorilla report. The shift isn’t just because it broadens the talent pool – nearly all respondents agreed that skills-based hiring is more predictive of on-the-job success than resumes.

Gartner lays out a framework to define and identify critical skill needs, which starts with gathering “good-enough” skills data – which is just enough to inform decisions, instead of waiting to get comprehensive data – and filling in the gaps with market intelligence.

Step one: Build an inventory of internal skills by gathering information in several areas:

• Self-assessments

• Analysis of talent data (job moves, talent profiles and résumés)

• Employees’ professional profiles on external sites (such as LinkedIn)

• Manager performance reviews or observations

• 360-degree assessments

• Surveys or vendor-provided assessments

Step two: Supplement internal skills information with labor market intelligence to gauge the availability of critical skills: 

• Skills adjacencies to help assess the feasibility of developing or redeploying talent

• Talent supply to assess the availability of skills in the external market

• Location analysis to review the feasibility at current and alternative locations of buying talent

• Competitive pressure to gauge the feasibility of competing for and hiring critical talent

• Hiring difficulty to estimate the time frame required to fulfill talent needs

HR tip: Don’t rely on just one perspective – consider both frontline and leadership views of skills, and combine your expertise with a balanced set of stakeholders to get a holistic view of skills across your company and existing needs.

Career growth & development: The secret to retention

Attracting talent is one thing. Retaining talent is a whole other ball game – one that you’ll strike out on if you don’t offer opportunities for growth and development.

Here’s why growth is more important than ever:

• 73% of workers planned to stay in their jobs in 2024, but 50% are doing so on the condition of upskilling/development, according to LHH.

• 67% of employees would stick with a company if offered opportunities for advancement and upskilling even if they hated their job. Conversely, a lack of career growth is the second biggest reason people leave, according to Korn Ferry.

But traditional growth is outdated for a world that’s shifting to focusing on future-ready skills – especially when that future is uncertain. Microlearning, mentorship, and on-the-job skill-building keep employees engaged and help develop a comprehensive set of skills that contribute to an adaptable, resilient workforce.

HR tip: Tie hiring to growth. Make upskilling and internal mobility a core part of your talent acquisition strategy and present clear career pathways to attract and retain talent. 

Unilever provides a blueprint: Their internal talent marketplace “FLEX Experiences”allows employees to access side jobs within the companies, like short-term projects and mentorship opportunities by matching their skills and aspirations with available opportunities across the company, with personalized AI-powered suggestions.

With clear trends emerging in talent acquisition, let's examine how organizations can overcome common hiring hurdles...

HR HURDLES
FOCUSING ON THE TALENT YOU ALREADY HAVE

In a tight labor market, your next great hire might already be on your payroll. Here’s how to unlock potential in your existing workforce through internal mobility and upskilling.

Hiring externally isn’t always the best solution – especially in a volatile, uncertain market. To build a future-ready workforce, companies must prioritize upskilling and internal mobility as core elements of their talent acquisition strategy. In fact, internal mobility has increased 6% year-over-year, despite a hiring slowdown, McKinsey found.

Internal hiring isn’t just good for building resilience – it has real business implications. According to research from Administrative Science Quarterly, external hires cost 18% more than internal hires. and the impact may shock you:

• External hires cost 18% more than internal hires, according to research from Administrative Science Quarterly

• It typically takes two years for the performance reviews of an external hire to reach the same level as those of an internal hire, according to Forbes 

• External hires are 61% more likely to be laid off or fired and 21% more likely to leave in their first year compared to internal hires in similar positions, according to Deloitte

Here’s a structured framework to embed upskilling and internal mobilityinto yourhiring and retention strategy.

Build a skills-based internal mobility program

Employees won’t apply for internal roles they don’t know exist or don’t feel qualified for. Make it easy for talent to move within your organization by removing barriers and promoting transparency.

The first step to creating an effective internal mobility strategy is to uncover future talent gaps and skill requirements to learn where to focus your internal mobility efforts. Compare existing skills with what future skills may be needed to identify the gaps.

Use internal platforms to list open roles, skill requirements, and career pathways. Ensure that tenure requirements or other unnecessary restrictions are removed to encourage internal employees to apply.

Implement a skills-based upskilling framework

Upskilling should be targeted, continuous, and aligned with future workforce needs. To ensure your upskilling is truly aligned with business goals, use a logic model to help you visualize your upskilling strategy, from planning to implementation to evaluation.

The U.S. Office of Personnel Management (OPM) offers a sample logic model – mapping your organizations drivers, inputs, activities, outputs, and outcomes.

Make career progression clear and attainable

Employees need to see where they’re going and how to get there. Create structured career pathways with visible progression opportunities.

Offering both vertical (promotion-based) and horizontal (cross-functional) career progression can ensure that employees find the opportunities best suited for their individual needs and aspirations. Regular career conversations with managers can help employees visualize their own growth and get external support.

💡 HR Tip: When employees see how others in the company have been able to climb up within the company, it can help make their paths a little clearer. Home Depot encourages leaders and managers to talk about their own career paths to help model growth and development for new employees. Leaders and managers are rated on their ability to fill talent pipelines with internal candidates, ensuring managers are as invested in internal mobility as possible.

Need a blueprint for a successful internal mobility strategy? Read on to see how NTT DATA achieved a 128% increase in employee self-nominations for open roles…

SUCCESS STORY
THE NTT DATA SKILLS-FIRST HIRING APPROACH YOU CAN IMPLEMENT IN 2025

How NTT DATA revolutionized their talent strategy by prioritizing skills and internal mobility, creating a more dynamic and engaged workforce.

Faced with hiring inefficiencies, project staffing challenges, and a lack of visibility into internal talent, NTT DATA set out to change the way they approached talent acquisition. By shifting to a skills-first hiring strategy and leveraging Eightfold AI’s Talent Intelligence Platform, the company created a smarter, faster, and more efficient way to attract and retain talent.

NTT’S AI-DRIVEN TRANSFORMATION

NTT DATA embraced AI-driven hiring and internal mobility to streamline talent acquisition and maximize workforce potential. Here’s how:

✅ Enhanced Skills Visibility – AI created dynamic skill profiles for employees, giving hiring managers real-time insights into internal talent.
✅ AI-Powered Matching – Machine learning improved candidate-job alignment, reducing time-to-hire and ensuring higher-quality hires.
✅ Internal First Hiring – Instead of defaulting to external recruitment, NTT DATA prioritized internal talent, filling more roles with existing employees and lowering hiring costs.

The results? A workforce more engaged and more effective

• 128% increase in employee self-nominations for open roles.

• 100% boost in employee referrals.

• 10% year-over-year rise in internal placements, reducing hiring costs and project delays.

💡 HR Tip: A dynamic skills profile gives employees and HR leaders real-time visibility into workforce capabilities, making internal mobility and career development more strategic and data-driven.

Here’s how to structure a skills profile that drives growth and better decision-making:

• Core Job Skills – The essential skills required for the employee’s role, validated with their manager. 

• Acquired Skills – The additional skills gained from previous roles or external experiences. 

• Desired Skills – The skills employees want to develop for future career growth. These help align learning opportunities with career aspirations.

Rank skills on a scale, such as 1-5 or beginner, proficient, advanced, etc.

Next up: The latest headlines shaping talent acquisition...

TOP PICKS FOR YOU
🗞️ IN CASE YOU MISSED IT

As you refine your talent acquisition strategy for 2025, below are the latest workforce developments…

MsKinsey Doubles Down on DEI

Amid a flux of companies rolling back DEI efforts – from Target to Goldman Sachs – McKinsey & Company maintains its commitment to diversity initiatives, despite federal DEI orders, citing diversity’s impact on innovation and growth. Read more →

Despite Unemployment, Tech Jobs Surge

In January, tech jobs and postings grew for the second consecutive month, with 51,000 net new job postings and a total of 476,000 active open roles. Despite the surge, IT unemployment rose to 2.9%. Read more →

Federal Workforce Cuts Move Forward

President Donald Trump’s plan to significantly reduce the federal workforce plows ahead with an executive order notifying federal agencies to prepare for widespread layoffs and a new attrition-based hiring model, allowing only one new hire for every four employees who leave. Read more →

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