Employee engagement and retention aren’t just buzzwords. They are critical drivers of productivity, profitability, and long-term organisational health.

Unfortunately, employee engagement continues to decline globally. Gallup’s latest data shows that it fell to 21% in 2024 from 23% the year before –  clear evidence that a significant share of the workforce feels disconnected from their organisations. The financial impact of this disengagement is enormous. The two-percentage-point drop in engagement in 2024 alone cost the global economy $438 billion in lost productivity.

At the same time, employee turnover sentiment is rising. In the UK and Germany, for instance, at least one in four employees was considering quitting in 2025. The cost of replacing them is steep: around 200% of annual salary for managers, 80% for technical roles, and 40% for frontline workers.

Together, declining engagement and rising turnover represent a costly and destabilising trend – one that signals an urgent need for more effective workforce strategies.

From our experience supporting thousands of employees and teams through the MuchSkills platform, skills assessments have emerged as one of the most reliable ways to improve employee engagement and reduce attrition.  

Skills assessments are far more than performance checklists. When done well, they give people clarity about where they stand, what they’re good at, and how they can grow – all of which are powerful drivers of motivation, recognition, and long-term commitment.

This clarity strengthens trust between employees and employers. Individuals feel seen and supported. Organisations gain a future-ready workforce whose verified capabilities and aspirations are more closely aligned with their strategy and mission.

Before exploring how skills assessments influence engagement and retention – and how platforms like MuchSkills make this process continuous and scalable – let’s clarify what a skills assessment actually is.

What are skills assessments?

A skills assessment is a structured process to understand what people in your organisation can actually do – their real capabilities, strengths, and proficiency levels – and how those skills align with the work, projects, and roles across an organisation. It provides evidence-based insight into current skills, emerging gaps, and development needs.

A well-designed skills assessment blends multiple perspectives:

• Employee self-assessment to capture confidence, motivation, and experience.
• Manager or peer validation to add context and reduce self-assessment bias.
• Skills frameworks that define the competencies expected for each role. This provides the standard or benchmark against which skills are measured. Without a clear framework, the assessment is subjective and meaningless.
• Regular updates that reflect new skills gained through projects, training, and experience. Skills are dynamic, not static. A system that doesn't account for continuous learning and skill acquisition (especially on-the-job through projects) quickly becomes irrelevant and demotivating.

Together, these elements create a reliable foundation for skills gap analysis, targeted upskilling, and strategic workforce planning. They connect individual skills data to real business decisions – from skills-first recruitment and internal mobility to personalised development plans and succession readiness.

Skills assessments also play a powerful role in employee engagement. When employees can see their strengths clearly, understand expectations, and track progress over time, they are more likely to feel recognised, supported, and connected to their future in the organisation.

For employers, the benefits are equally compelling. A structured assessment process creates a future-ready workforce whose verified capabilities, aspirations, and development plans align directly with the organisation’s goals and strategy. With accurate insight into both current skills and emerging potential, employers can make smarter decisions about talent deployment, development investments, and workforce planning. The result is a more agile, adaptable organisation that can respond quickly to changing demands while retaining high-performing talent.

Modern platforms like MuchSkills make this process continuous and transparent, turning assessments into living data that evolves as people grow. With a clear view of both current capability and future potential, organisations can align development, mobility, and career conversations with what employees value most – creating a future-ready workforce built on clarity, trust, and shared purpose.

How does one conduct a skills assessment?

Skills assessments take various forms and organisations typically use a combination of them to build a reliable 360-degree view of workforce capability. Common approaches include self-assessments, manager and peer reviews, 360-degree feedback, and structured interviews. 

These can measure a wide range of competencies – from technical and functional skills to cognitive abilities such as problem-solving, analytical thinking, collaboration, and communication, as well as leadership and behavioural strengths relevant to specific roles or teams.  

Using multiple methods gives a more balanced and trustworthy picture of both proficiency and potential. 

Modern skills intelligence platforms like MuchSkills make this far easier. Instead of capturing such assessments in scattered spreadsheets created during annual reviews, organisations can map skills against predefined role expectations, refer back to them regularly during one-on-ones, and update profiles as employees learn, gain certifications, or take on new responsibilities. The result is a real-time, accurate view of workforce capability – one that employees trust and leaders can use to drive engagement, mobility, and growth.

The link between skills and employee engagement

Research has established that employees who feel their skills are recognised, valued, and used effectively tend to be far more engaged at work. They contribute more actively, collaborate more confidently, and are significantly less likely to leave. When engagement drops, it is often because individuals feel invisible – unsure whether their strengths matter, whether anyone sees their progress, or whether they have a future in the organisation.

Structured skills assessments help address this. By bringing visibility and clarity to what people can do – and what they want to do – they help employees understand their place in the organisation and how they can grow. They create a shared language for capability, reduce ambiguity about expectations, and turn development conversations into actionable plans.

From an employee engagement perspective, this matters enormously. When employees can clearly see what is expected of them, where they excel, and which development paths are available – and when they know the organisation intends to support that growth – motivation rises naturally. The workplace becomes a space where strengths are recognised and potential is actively developed.

For organisations, the payoff is twofold. Skills assessments reveal not only where capability is missing, but also where untapped strengths and ambitions already exist. This insight makes it easier to align people with meaningful work, offer learning opportunities that feel relevant, and build internal mobility pathways that keep talent engaged rather than looking elsewhere.

Modern skills intelligence platforms like MuchSkills strengthen this connection even further. Because skills data is updated continuously, development and engagement no longer depend on an annual cycle. Employees see progress reflected as it happens, and managers gain a dynamic, people-centred view of strengths, growth, and potential. That sense of visibility and forward movement is a powerful driver of long-term engagement and retention.

To build engagement at its source, organisations must make skills visibility and utilisation central to their talent strategy. One proven way to do this is by using structured skills assessments. Skills-based assessments boost engagement because:

1. They prioritise learning

Skills assessments turn learning from a generic HR activity into a personalised experience. By creating a clear picture of what employees do well and where they can grow,  assessments help managers shape development plans that feel relevant and achievable. 

This focus on growth aligns closely with what employees want today. In PwC’s Global Workforce Hopes and Fears Survey 2024, nearly half of the 56,000 respondents said their decision to stay with an employer depends on having opportunities to learn new skills at work. This means that many employees will choose to stay or leave based on whether they are given meaningful opportunities to learn.

When people can see a clear path forward, engagement rises naturally. Learning becomes something employees look forward to, not something they are left to figure out alone.

With MuchSkills, this process becomes even more powerful: skill insights flow directly into role-based gap reports, AI-guided development goals, and real-time learning pathways that evolve as employees gain new competencies.

2. They normalise employee recognition

Recognition is one of the strongest drivers of engagement. It validates effort, builds confidence, and strengthens team morale – yet in many organisations it remains informal, inconsistent, and easy to overlook. Employees who feel undervalued are twice as likely to quit as those who believe their contributions are recognised.

Skills assessments make recognition a structured and continuous practice. When an organisation can clearly see who is developing, contributing, and growing, appreciation becomes easier, faster, and fairer. By grounding recognition in verified skills data rather than subjective impressions, skills assessments ensure that employees are acknowledged for real capability and progress. 

Platforms like MuchSkills reinforce this even further by turning validated skills, badges, and achievements into a living profile that managers and employees can reference during one-on-ones, project staffing decisions, and performance discussions.

When recognition is based on transparent, evidence-backed insights, it becomes more consistent and meaningful. This builds confidence, reinforces a sense of belonging, and boosts morale –  forming the foundation of a culture where people feel seen, valued, and inspired to stay and grow.

3. They drive workforce development 

Skills assessments are catalysts for workforce development because they give leaders a clear, data-driven view of the organisation's current capabilities and future needs, making it easier to build targeted development programmes, support internal mobility, and design  personalised career pathways.

For employees, this creates a workplace that feels invested in their future. When people see that their skills are being mapped, their progress being tracked, and their ambitions supported, trust grows quickly. Instead of feeling stuck, employees feel guided and supported – and that sense of forward movement is one of the strongest deterrents to disengagement and turnover.

MuchSkills operationalises this at scale by connecting skills data to everyday growth conversations, AI-supported goals-setting, and succession planning dashboards. The result is a more transparent, collaborative, and future-ready organisation. 

Gallup’s global strengths meta-analysis demonstrates how personal growth and professional engagement reinforce each other. It shows that engaged employees report a 70% increase in overall wellbeing and 78% less absenteeism.

Skills assessments and retention

High employee turnover is costly and destabilising. Research shows that many new hires leave within their first year, and even high performers disengage when their strengths go unnoticed or when their roles fail to align with their long-term aspirations. A skills-first approach, grounded in regular, structured assessments, reduces this risk by ensuring people are placed in roles where they can contribute meaningfully – and see a future for themselves in the organisation.

Skills assessments help leaders understand whether employees are equipped for their current responsibilities, where stretch opportunities exist, and what mobility or development options could keep talent engaged. Because managers rely on this insight to set expectations, assign meaningful work, and support growth, skills assessments directly strengthen the employee–manager relationship – the most powerful driver of retention. 

According to Gallup, managers account for 70% of the variance in team engagement, and engaged employees are significantly less likely to quit. 

Crucially, skills assessments also help organisations identify leadership potential early and nurture it intentionally. This matters because empathetic, growth-oriented managers are proven to improve retention outcomes, while unclear expectations, stagnant roles, and limited visibility into future opportunities often push employees toward the exit.

MuchSkills makes all this work systematic and scalable. Organisations can build a consistent skills taxonomy and skills matrix, identify current and emerging capability gaps, and support targeted upskilling, reskilling, and personalised career development pathways. With transparent skills profiles, continuously updated data, certification tracking, and clear role-to-skill mapping, employees gain visibility into their progress – reinforcing confidence, belonging, and commitment. The result is a more stable, adaptable workforce that is better prepared for shifting business demands and far less prone to unnecessary turnover.

Case study: IKEA’s retention strategy

Home furnishing giant IKEA adopted a two-pronged strategy to improve employee retention – dedicated upskilling and reskilling programmes, and the use of AI-driven insights – according to a report by Forbes.

Under the first initiative, IKEA introduced a development programme that allowed employees to step into each other’s roles and take on assignments that built new skills and experience. Employees were encouraged to share their career goals with managers and were supported with internal mobility opportunities to help them pursue those ambitions. This approach of giving employees ownership of their growth led to call centre workers transitioning into interior design advisors, and enabled IKEA to recruit 90% of its leaders internally.

The second initiative focused on using AI to support managers in predicting retention risk. By analysing employee data, AI helped identify individuals who were potentially at risk of leaving. Managers then used these insights to initiate targeted conversations, understand concerns, and explore ways to retain those employees. Piloted in 122 stores across six countries, the initiative drove a 2.7% improvement in voluntary turnover in the first three countries.

Skills assessment best practices

Based on our experience with thousands of teams in organisations around the world, here are four practices that help managers use skills assessments to strengthen engagement and retention without falling back on traditional tick-box processes.

1. Make skills conversations part of the everyday workflow: Engagement rises when development is continuous, not episodic. Integrating brief skills check-ins into one-on-ones and project reviews gives employees regular feedback, reinforces progress, and helps managers respond quickly to shifting capability needs.

2. Anchor all feedback in verified skills data: Employees trust feedback when it is grounded in evidence rather than opinion. Using validated skills profiles during discussions reduces bias, clarifies expectations, and shows employees that their strengths and growth are being seen accurately. This creates psychological safety –  a core ingredient of engagement.

3. Use skills insights to open mobility pathways, not just close gaps: Skills assessments shouldn’t be limited to identifying weaknesses. They reveal hidden strengths, emerging potential, and opportunities for meaningful stretch assignments. When employees see that their skills open doors – to new projects, responsibilities, or roles – commitment and retention increase.

4. Give employees visibility into their own progress: Transparency builds trust. When employees can see how their skills evolve over time – through updated profiles, certifications, badges, and role-fit insights – they understand the connection between their effort and their future. This sense of forward movement is one of the strongest deterrents to disengagement and turnover.

MuchSkills makes these practices simple and scalable by providing validated skills data, role-based expectations, continuously updated profiles, and growth insights that managers and employees can use together. Applied consistently, these transform skills assessments from an administrative exercise into a powerful driver of engagement, mobility, and long-term retention.

How MuchSkills helps organisations run effective, fair, and engaging skills assessments

MuchSkills enables organisations to run skills assessments that are consistent, transparent, and directly linked to engagement and growth. Here are three ways the platform supports managers and employees in making skills assessments meaningful and actionable:

1. Continuously updated, validated skills data

MuchSkills keeps skills information current by combining employee self-assessment, manager validation, and certification tracking in one place. The platform’s bias-aware 3×3 proficiency matrix helps employees assess themselves more accurately, while managers can validate skills during one-on-ones or performance discussions. A certification workflow tracks credentials, badges, and expiry dates, ensuring that both skills and compliance information stay up to date across teams.

2. Role-based insights that support growth, mobility, and retention

Using structured role frameworks, MuchSkills generates clear skills gap reports for every employee. These insights feed directly into AI-supported growth goals, personalised development plans, and internal mobility opportunities that align with both employee aspirations and organisational needs. Managers can use these insights during one-on-ones, check-ins, and coaching conversations to discuss readiness, career paths, and development priorities with clarity and confidence.

3. Built for transparency and shared understanding

MuchSkills supports a culture of fairness by giving employees visibility into how their skills compare against role expectations, team needs, and development pathways. This transparency helps employees take ownership of their growth while reducing the ambiguity and bias that often undermine performance conversations. With access to validated profiles, skill histories, and role-to-skill mapping, both employees and managers have a shared, trusted view of capability – forming the basis for more balanced assessments and better development decisions.

Together, these capabilities turn skills assessments from a one-off activity into a consistent part of everyday growth and engagement, ensuring that people feel recognised, supported, and connected to their future in the organisation.

In conclusion

With nearly 80% of the global workforce disengaged, organisations face growing pressure to build environments where people feel recognised, supported, and able to grow. In a world defined by rapid technological change, shifting capability demands, and persistent talent shortages, skills assessments have become a critical lever for strengthening engagement and retaining talent. When they are structured, continuous, and connected to development, they give employees a clear understanding of their strengths and future – and give managers the insight to support them effectively.
Platforms like MuchSkills make this possible at scale, turning skills assessments into a living system that drives clarity, fairness, and meaningful progress. For organisations committed to nurturing and retaining their people, skills intelligence is no longer optional – it is a foundation for long-term resilience and success.