Skills-First: How UK CEOs Must Redesign the Workforce in 2026

The skills-first operating model — organising work around capabilities rather than job titles — is the UK CEO’s most consequential workforce decision of 2026. According to EY’s CEO Outlook 2026, 38% of CEOs are actively redesigning roles and workflows around skills, rising to 58% in financial services and insurance sectors.

This is not an HR agenda. It is a strategic imperative driven by three converging forces: AI is automating task-based roles faster than new roles are being defined; the UK Growth and Skills Levy creates financial incentives to invest in skills-based development over traditional recruitment; and competition for demonstrably capable talent is more acute than at any point in the past decade. CEOs who continue to organise their workforce around job description hierarchies rather than skills portfolios will find themselves structurally disadvantaged in talent acquisition, workforce agility, and AI-enabled productivity.

Why Is the Skills-First Model the Defining CEO Workforce Priority for 2026?

Over half of UK CEOs (57%) are currently undertaking a significant enterprise-wide transformation initiative, according to EY UK research published in 2026. In the majority of cases, workforce redesign is a central component — not a downstream consequence — of that transformation. The challenge is that most UK enterprises have spent decades building job architecture around roles, grades, and functions that no longer reflect how value is created in an AI-augmented operating environment.

AI disrupts task-based role definitions faster than traditional job evaluation frameworks can respond. A financial analyst whose core tasks were data gathering, spreadsheet modelling, and report generation now works alongside AI tools that compress 80% of those tasks into minutes. The role does not disappear — but its skills composition transforms fundamentally, requiring judgement, interpretation, stakeholder communication, and AI tool governance rather than data processing. CEOs who recognise this transformation as a skills architecture challenge — rather than a headcount reduction question — are building organisations that can adapt continuously.

According to Oliver Wyman Forum research published in 2026, CEOs who lag on AI adoption and workforce redesign are losing approximately 10% of market capitalisation relative to peers. The performance gap between AI-integrated talent operating models and traditional hierarchical structures is now measurable and material at enterprise level.

Executive Action:

• Commission a skills mapping exercise across your top 200 roles — not a job evaluation, but a task decomposition: which tasks within each role are AI-automatable within 24 months, and what skills become more valuable as a result?
• Engage the CHRO and CIO jointly to define the target skills architecture for your three most strategically critical functions — the intersection of AI capability and human judgement is different in every function and cannot be designed centrally without domain input.
• Present the skills-first business case to the board as a talent risk management story: what is the cost of failing to close identified skills gaps against AI-augmented competitors within 18 months? Use our executive self-assessment to benchmark current workforce readiness.

How Should UK CEOs Structure a Skills-First Operating Model?

A skills-first operating model has three structural components. The first is a dynamic skills taxonomy — a living framework that maps capabilities required across the organisation, updated as AI adoption changes task composition. Unlike traditional competency frameworks, a skills taxonomy is granular (specifying capabilities at task level, not function level), dynamic (updated at least annually), and connected to external labour market intelligence (reflecting what skills are scarce, emerging, or commoditising in the market).

The second component is skills-based talent processes — where hiring, promotion, project assignment, and development investment are led by demonstrated skills rather than job title tenure. This requires significant changes to HR systems, line manager behaviour, and executive talent review practices. Leading UK firms are piloting internal talent marketplaces — AI-powered platforms that match employee skills profiles to project opportunities across the organisation — as a mechanism to unlock mobility without the friction of traditional redeployment processes.

The third component is skills-based learning investment. The UK Growth and Skills Levy — reforming from the Apprenticeship Levy — creates a mechanism for CEOs to fund skills development with levy funds, but the architecture of skills investment must be designed around strategic skills gaps, not legacy training catalogues. According to Heidrick & Struggles analysis published in 2026, human capital expertise demand has increased 129% year-on-year, reflecting the acute shortage of practitioners who can design and execute skills-based operating models at enterprise scale.

Executive Action:

• Establish a Skills Architecture Board — a cross-functional group chaired by the CEO or COO, including the CHRO, CIO, and two or three business unit heads — with a mandate to define, monitor, and update the enterprise skills taxonomy quarterly.
• Pilot an internal talent marketplace in one business unit within H2 2026, using existing HR system capabilities or a specialist platform. Measure employee engagement, time-to-fill internal project roles, and skills utilisation rate as the primary success metrics.
• Review your Growth and Skills Levy spending plan against your strategic skills taxonomy — if levy-funded training is not mapped to the capabilities your AI transformation programme requires, the investment is not generating strategic return.

How Should UK CEOs Handle the Workforce Reduction Pressure Alongside Skills Investment?

One of the most difficult strategic tensions UK CEOs face in 2026 is the simultaneous pressure to reduce workforce costs — particularly in functions where AI is automating previously labour-intensive tasks — while investing in the skills that AI-augmented work requires. European CEOs are the most likely globally to be reducing headcount, with EY research showing 38% planning reductions of more than 5%, driven largely by AI-enabled efficiency gains.

The risk of mismanaging this tension is significant. Workforce reductions that remove skills the organisation needs to execute AI-enabled strategy create costly rehiring cycles. Conversely, protecting headcount in roles that AI has fundamentally transformed simply defers the structural adjustment and delays the productivity gains that justify the AI investment.

The skills-first operating model provides the analytical framework to navigate this tension: skills mapping identifies which roles are being transformed (where reskilling is the right investment) versus which roles are being eliminated (where reduction and redeployment is necessary). CEOs who can make these distinctions with granularity — rather than applying blanket efficiency targets — build organisations that are both structurally efficient and strategically capable. Visit our briefing library for workforce transformation frameworks used by UK executive teams.

Executive Action:

• Apply a three-category framework to every role in scope for workforce review: Augment (AI enhances the role — invest in skills), Transform (AI changes the role fundamentally — reskill the individual), Automate (AI replaces the task set — manage reduction with care). This framework improves both the quality and defensibility of workforce decisions.
• Ensure the Remuneration Committee reviews how performance frameworks reward skills acquisition and AI tool adoption, not just output metrics — incentive alignment is essential for driving skills-first behaviour at senior leadership levels.
• Engage your employment law adviser before implementing skills-based restructuring to ensure compliance with the Employment Rights Act 2023 and the additional obligations introduced by the July 2026 employment law changes.

What Does a Successful Skills-First Transformation Look Like in 12 Months?

By mid-2027, a UK CEO who has executed a skills-first transformation effectively will be able to demonstrate: a dynamic skills taxonomy covering at least 80% of the workforce, updated in the past six months; an internal talent marketplace with measurable utilisation and skills mobility metrics; AI skills adoption rates tracked at function level, with a clear upward trajectory; and a levy spending plan fully aligned to strategic skills priorities.

The board’s role is to hold the CEO accountable to skills transformation milestones in the same way it holds the CEO to financial performance. Succession planning — already the top workforce priority for 59% of CEOs according to EY 2026 data — increasingly requires skills profiling of internal candidates against an AI-augmented leadership skills model, not just traditional leadership competency assessment. Explore our technology strategy review template for a structured board review framework applicable to workforce transformation programmes.

Executive Action:

• Set four 12-month milestones for the board: skills taxonomy complete (Q3 2026), internal marketplace piloted (Q4 2026), AI skills adoption baseline established (Q1 2027), and levy alignment confirmed (Q2 2027).
• Commission skills-based successor profiling for the top 20 leadership roles, identifying the delta between current incumbent skills and the AI-augmented skills profile required in the role within three years.
• Present the skills transformation narrative in the next annual report strategic review — investors and institutional shareholders are increasingly assessing workforce adaptability as a strategic quality indicator for UK listed companies.

INFORMD provides intelligence briefings, tools and frameworks for senior business leaders across technology, finance, strategy and compliance. Based in Milton Keynes, UK, we help executives stay informed and act with confidence. Explore our full briefing library or access our free assessment tools.

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