Smaller Businesses Want Skills-Based Hiring That Meets Them Where They Are
September 11, 2026
At a Glance
Small and mid-sized businesses employ nearly half of U.S. workers, yet most skills-first tools target large enterprises. Through JFF’s eight-month partnership, six businesses codesigned practical, skills-based talent solutions.
Key Takeaways
- Starting skills-first transformation at the small or mid-sized business level requires an initial listening period, allowing one to deeply understand the key challenges and how they work within a business’s unique operational context.
- There is often a gap between what leadership believes about their talent systems and what frontline workers and managers experience.
- The codesign process works best when businesses are given first drafts to react to rather than blank pages to fill. Reaction is faster than creation and produces stronger ownership when complete.
- Middle managers are the linchpin of any talent system change. Equipping them with the right tools and a shared language is the core of a successful implementation strategy.
- Sustainability requires internal investment. When leadership commits time and team capacity, solutions move faster and feel genuinely owned.
Introduction
For millions of workers, the difference between a dead-end job and a career comes down to one thing: whether their employer has a system for recognizing their capabilities.
For this project, Jobs for the Future (JFF) specifically targeted small and medium-sized businesses (SMBs) because of the critical role they play as an engine of the U.S. economy, employing 46% of the U.S. private-sector workforce, generating 44% of U.S. economic activity, and accounting for 70% of net new private-sector jobs created since 2019. Yet, despite their impact on the economy, SMBs have largely been left out of the skills-first conversation. Most research, tools, and implementation support have been designed for large enterprises with dedicated HR infrastructure and the capacity to absorb complex, generalized frameworks. SMBs face a fundamentally different set of challenges. They typically operate with minimal formal HR functions, if any, prioritizing lean management structures to keep operations running smoothly. For workers in these environments, the absence of structured talent systems often means hiring processes are rarely reviewed, advancement criteria are unclear, and career growth depends on who you know rather than what you can do.
In response to these challenges, JFF launched the SMB Skills Partnership: Unlocking Skills-Based Practices Through Codesign in January 2026. This eight-month initiative worked directly with a cohort of six businesses to codesign solutions to their problems. Our process starts with listening, understanding what employers actually need, and identifying where a skills lens offers a viable, practical path forward. From there, we codesign solutions alongside our partners, test and iterate, and generate insights that can benefit the broader field. This piece captures what we have learned through the first two phases of that process, recruitment and discovery, and frames the hypotheses we are now testing as the work moves into codesign and implementation.
Defining skills-based talent management
Skills-based talent management does not mean simply removing degree requirements from job postings, though that is a common first step on the journey. JFF approaches skills-based practices as a broader reimagining of how work is defined, how people are hired, how careers are structured, and how advancement decisions are made, all grounded in clearly articulated and consistently applied skills and competencies rather than credentials, tenure, or manager intuition alone.
For SMBs, this often means leveraging what already exists: revising job descriptions, identifying competency domains common across a job classification, and laddering skills up a career path so that workers can see how to build the skills required to advance. Using this framework, we can create tools that help managers make fair and consistent hiring and advancement decisions. It is a system-level shift, not a single policy change, and it requires a different kind of support than the field has typically offered employers of this size.
Choosing project partners across sectors and regions
The SMB Skills Partnership selected six businesses from across sectors, geographies, and operational contexts to reflect the variety of the SMB landscape and surface insights that may apply broadly. Our cohort included:
- A field merchandising firm seeking to professionalize and scale a skills-based model for product specialists and middle management; 4 full-time employees, plus multiple 1099 workers
- A commercial cleaning business building an internal pipeline to grow frontline workers into team leads and managers; 25 employees
- A frontline cleaning services company focused on improving retention and sourcing in a highly competitive labor market; 165 employees
- A boat manufacturer seeking to shift from ad-hoc, experience-based hiring to a structured, skills-based talent model for production roles; 200 employees
- A sports equipment manufacturer aiming to build transparent, skills-based career pathways for high-turnover production roles; 245 employees
- A workforce services organization working to define the skills that predict success in fast-changing, mission-driven roles; 500 employees
Each business entered the partnership with a distinct talent-related problem to solve, a specific set of operational constraints, and its own starting point on the skills-first journey. That composition was intentional. Our goal was not to find a single universal solution, but to understand what remained similar across contexts and what must be adapted to each.
Our strategy
We organized our engagement in five phases: recruitment, discovery, codesign, implementation, and evaluation, designed to deepen the partnership and move progressively from understanding to action. Our guiding principle was letting the businesses lead. Therefore, rather than arriving with a pre-packaged solution to implement, we approached each partner as a co-investigator. We wanted to understand their specific pain points before proposing any intervention, which we would design alongside them rather than for them. While JFF brought frameworks, first drafts, and facilitations, the businesses brought operational reality, worker knowledge, and the leadership buy-in required to make any solution stick.
Below, we share what that approach surfaced and frame the hypotheses we are now testing as the work progresses.
Recruitment revealed high demand
Recruitment confirmed what we suspected but had not yet documented at this scale: demand among SMBs for structured talent management support is real and urgent.
Our recruitment process combined highly targeted outreach to businesses JFF had worked with on prior initiatives, and broader outreach through partner networks. We used a short application form and in-depth interviews to finalize our cohort. What we found among applicants revealed:
- Small businesses are hungry for talent management solutions, but are not always able to articulate their needs in a shared language with those who can provide them.
- Many businesses are already incorporating skills-based practices informally, under different names, or without the frameworks to formalize and scale them.
- Several applicants presented problems during interviews that were materially different from those described in their applications. This confirmed that holding space for structured conversations before commitment is an essential part of the process, not just an administrative step.
- Businesses that came in with a clear, well-defined problem and a committed internal point person were better positioned to engage deeply from the outset.
The key lesson from recruitment is that small businesses engaged with JFF because they had a real and immediate talent management problem to solve, not because of the specific skills-first lens JFF offered. That distinction matters for how we design outreach, how we frame work with employers, and how we approach scalability. Moving from their current systems to skills-based approaches allowed us to meet their needs and advance the adoption of skills-first talent management.
Lessons from discovery: agency and transparency
Discovery was comprised of virtual sessions with leadership teams and in-person site visits that included focus groups with managers and frontline workers. The value of including worker voices cannot be overstated. For most of the businesses we worked with, site visits and focus groups revealed that employer problem statements rarely captured the full picture of what was happening in their talent systems.
Across all six businesses, we found a consistent pattern: advancement decisions were driven by vacancy, timing, or manager relationships, not by clearly defined skills criteria. No business had a formal, documented, consistently applied set of competencies guiding who got promoted, how quickly, or why. Most leadership teams believed they were making good decisions. Workers, when asked, were less certain.
That gap between leadership perception and worker experience was one of the most striking findings across the cohort. In every site visit, frontline workers and mid-level managers expressed enthusiasm for clearer advancement criteria and more transparent systems, often more urgently than leadership had anticipated. Worker sessions did not just add context; they shifted what leadership believed the problem actually was.
We also observed four additional patterns across the partnerships:
Skills-based role clarity and career architecture emerged as a common need. Despite starting with different problem statements and operational contexts, five of the six businesses ultimately codesigned a solution anchored in a clearly defined, skills-based role architecture, including updated job descriptions, competency frameworks, and career progression criteria. The sixth and smallest business determined that skills-based hiring and onboarding at the top of the talent management funnel was the best solution.
All six businesses identified coachability, reliability, communication, adaptability, and problem-solving as the skills that predict success. None had formally defined, documented, or applied these behavioral and durable skills consistently in hiring or promotion decisions.
Frontline and mid-level managers are the linchpins of talent systems, and they are under-equipped. Managers are responsible for hiring, onboarding, coaching, and advancement. Across the cohort, they lacked the tools, time, and training to do this consistently or fairly. This is not a motivation problem; it is a systems problem.
There is a consistent disconnect between stated organizational values and how those values translate into day-to-day talent decisions. Businesses could articulate their culture. They could not yet articulate the specific skills and behaviors required by that culture at each role level. That gap is where JFF’s work added distinct value by mapping the desired durable skills to value statements.
Where the cohort diverged was in entry point and sequencing. For some businesses, career progression was the clear initial focus, and hiring was added. For others, hiring was the presented challenge, and progression emerged as equally urgent. For a third group, a complete skills-based talent management strategy was desired, but through iterative conversations, either hiring or progression strategies were deemed the best focus areas. This confirmed that an iterative, hypothesis-driven approach, rather than a preset solution pathway, was both appropriate and necessary.
Testing steps for codesign
Discovery determined a shared problem among the businesses. Codesign is where we begin to build solutions together. We enter this phase with three core hypotheses we are actively testing.
If SMBs are engaged as true thought partners in the solution design process, they will produce more refined, context-specific solutions and build stronger internal ownership of the work.
Our process positions JFF as the architect of early drafts: skills frameworks, job description templates, career progression matrices, and competency guides. We bring these artifacts to codesign sessions for businesses to interrogate, revise, and claim as their own. We believe this approach reduces the cognitive load on busy practitioners while ensuring that what we produce reflects the real operational texture of their organizations.
If businesses commit dedicated leadership and team time throughout the codesign phase, supported by modest sub-grant resources, the resulting solutions will reflect sufficient internal investment to sustain them beyond their partnership with JFF.
Sustained engagement requires that the right people are in the room. When businesses brought together HR leaders, frontline managers, and executive decision-makers in codesign sessions, the work moved faster and produced stronger results. We are watching for patterns in how organizational size, internal capacity, and leadership investment shape both the quality and durability of what we build together.
If the initial site visit and discovery process generates a sufficiently clear and shared problem, JFF and each business partner will enter codesign with aligned expectations about the solution, reducing iteration time and increasing the likelihood of an actionable implementation plan.
Across the cohort, our initial instincts about what solution would be most effective were largely validated through the discovery process, and most businesses aligned with our thinking after site visits. The next test is whether that alignment holds through the more complex, iterative work of designing tools and systems that fit each business’s context
Keys for implementation
As the cohort moves into implementation, we are also watching three additional dynamics:
- If businesses are equipped with clear tools and manager-facing resources before implementation begins, middle managers will be able to translate new practices into consistent behaviors at the team level.
- Solutions are only as impactful as the managers who use them. We anticipate that implementation will require significant technical assistance and that the quality of manager engagement will be a critical variable in whether outcomes hold.
- If JFF provides ongoing guidance on building a common internal language around skills during implementation, businesses will be better able to internally align their culture, competency frameworks, and day-to-day talent decisions.
One of the clearest patterns we discovered was the disconnect between what organizations say they value and how those values show up in talent systems. We believe the missing link is operationalizing a shared vocabulary of naming, discussing, and applying skills that feel natural to managers and workers, rather than bureaucratic. Building that language and embedding it in the tools businesses already use for onboarding, training, and professional development conversations is one of the things we are most focused on testing.
Conclusion
As the cohort moves from codesign into implementation, our goal is to understand not just what changed, but under what conditions change was possible and what it would take to replicate and scale.
Our evaluation agenda centers on three questions that we believe will shape the field’s understanding of skills-first transformation at the employer level:
- To what extent did the codesigned solutions improve the business outcomes that motivated each partnership? We are tracking impact across early turnover, hiring bottlenecks, career progression clarity, and other firm-specific metrics. We are equally focused on how workers in targeted roles experience these changes in terms of fairness, clarity, and opportunity.
- How did SMB practices and systems around talent and skills actually change? Not just what tools were built, but which ones were adopted, which required adaptation, and which faced resistance, and why.
- What will it take to sustain and scale the solutions we build together? For individual businesses: which practices feel sustainable six to 12 months out? For JFF: what does a repeatable, scalable version of this engagement model look like, and what role can public-sector resources and technology (especially AI tools) play in making it accessible to more SMBs?
To answer all three questions, it is crucial to assess employee experience. Skills-first transformation is not just a business strategy. It is a commitment to making talent systems more transparent, more fair, and more responsive to the people doing the work. We believe that the businesses in this cohort are genuinely motivated by that goal, and we see it as our responsibility to hold that standard as we design, test, and learn together.
As JFF works to build a skills-first economy, one thing has become increasingly clear: there is no single entry point, no universal solution, and no shortcut to building the trust that makes systemic change last. This partnership with SMBs helped us understand what it takes to build that trust at the employer level and what the field will need to replicate it at scale.