Your roadmap for building a skills-based organization

85 million jobs will go unfilled by 2030 due to a lack of available skills. That’s 85 million people who, without intervention now, will be out of work. But there’s a solution to be found in skills-based organizations, a “new” type of approach to managing the workforce that Deloitte says 98% of executives plan to incorporate in the future.

What is a skills-based organization?

A skills-based organization is any organization that places skills at the core of its talent management strategies by allocating workers to opportunities based on their skills and capabilities. A skills-based organization recognizes that people have a wide range of unique skills and capabilities that they can use to benefit the organization in the long term.

The growing move to becoming skills-based is redefining the fundamentals of work by focusing on the tasks and activities required to achieve specific outcomes instead of adhering to traditional roles and job descriptions. In essence, it’s deconstructing conventional job roles into smaller, more manageable parts, emphasizing the specific "work to be done."

A skills-based organization will typically exhibit three core characteristics:

• Less emphasis on qualifications: Skills-based organizations don’t focus on college degrees and professional qualifications. Instead, they prioritize practical experience and knowledge to tap into a broader talent pool.

• More emphasis on internal mobility: Skills-based organizations provide employees with opportunities for career development and growth. This helps fill skills gaps, retain employees, and build an agile workforce.

• Fewer roles, more tasks: Skills-based organizations break down job roles into individual tasks. This makes it easier to see the skills required for each task and organize work around them, which is more efficient.

Why are organizations transitioning to a skills-based approach?

Organizations are making the switch from being roles-based to skills-based for a variety of reasons. Chief among them is the pressure to adopt more technologies against a backdrop of digital transformation. More than 75% of companies are looking to adopt technologies like big data, cloud computing, and AI within the next five years, and workers’ skills will need to change in response otherwise organizations will face widening skills gaps. At the same time, finding the right talent is a challenge. According to McKinsey, 40% of employees who remain in the same occupations by 2030 will need to reskill, and one in 16 workers may need to switch occupations entirely.

By defining work in terms of specific skill requirements rather than job titles, organizations can access a broader talent pool. A skills-based approach also provides greater flexibility in accessing and utilizing talent. By focusing on specific skills needed for tasks, organizations can more effectively match talent with their needs at that point in time and switch things up as demand and needs change.

Building a skills-based organization

SkyHive experts recently collaborated with The Academy to Innovate HR, an online training provider for HR professionals, to put together a guide on the steps required to become a skills-based organization. Split into ten steps across three phases, it sets out a roadmap for building a skills-based organization. We’ve broken down some of the key points here:

Phase 1: The business case for skills

Step 1: Define what ‘skills’ mean to you

Begin by clarifying what "skills" mean within your organization's context. To us here at SkyHive, skills are specific abilities or proficiencies that individuals develop through practice and experience. They are often task-oriented and measurable, focusing on the capability to perform particular activities effectively, and categorized into technical skills, soft skills, and transferable skills. Organizations may account for some or all of these when planning their skills-based transition.

Step 2: Articulate the business benefit

Clearly articulate the benefits of becoming a skills-based organization. Identify the value-add of this approach by answering key questions:

• Why is a skills-based approach the right direction for the organization?
• What specific business problems will it address?
• How will success be measured?
• How does this approach differ from current practices?

For instance, if the goal is to increase the available talent pool through skills-based hiring practices, the success criteria will differ from an objective to enhance internal mobility through a skills-based internal marketplace. Clearly defining these benefits and success metrics will help align the organization's goals with the skills-based approach.

Phase 2: Deconstruct and determine your needs

Step 3: Break jobs down into “work to be done” or “tasks to be completed”

Deconstruct traditional job descriptions into specific tasks and activities. Instead of defining jobs as a list of responsibilities assigned to an individual, focus on the outcomes or results expected. For example, instead of searching for a "Business Analyst," look for talent with skills in requirement analysis, process documentation, and user acceptance testing. This granular approach allows for flexibility in talent deployment, where one individual can perform multiple tasks, or tasks can be distributed among several individuals or automated.

Step 4: Organize the Work Around Outputs and Skills

Organize work around the required skills and desired outputs. Cluster skills optimally to facilitate easy access and deployment, ensuring tasks are completed efficiently. This approach promotes internal talent reuse, redeployment, and reskilling, providing opportunities for individuals to work beyond the confines of traditional job roles. It also supports flexible talent strategies to manage supply and demand effectively.

Step 5: Understand the skills you need

Develop a robust, data-driven approach to map the skills profile of the organization. Utilize a skills segmentation matrix to evaluate:

• Scarcity: How rare is this skill in the market?
• Criticality: How crucial is this skill for executing the work?
• Volume: How much of this skill is needed?

For example, a software development company like Grafix might identify essential skills such as C# coding, QA testing, and project management. By analyzing historical data and future project pipelines, they can determine the scarcity, criticality, and volume of these skills. This information helps in strategic workforce planning and external talent sourcing.

Step 6: Understand your skills inventory

Collect data on the skills you can access, (i.e., your internal skills inventory) using technology solutions and skills-based assessments. Platforms powered by AI or machine learning like SkyHive, for example, can match skills to tasks efficiently.

Additionally, gather data from skills-based assessments and previous experiences to build a comprehensive internal skills database. Evaluate external talent pools, such as freelancers or contractors from platforms like Fiverr or Upwork, to supplement specific skills and ensure these relationships are in place.

Phase 3: Transition and manage the change

Step 7: Incorporate Skills as the Basis for HR Practices

Integrate skills-based approaches across HR practices. Examples include:

• Organizational design and workforce planning: Use organizational capabilities to determine broad outcomes and identify the underpinning skills needed. Assess workforce planning demands based on these skills.

• Skills-based hiring practices: Pool skills through alternative talent sources and deploy them in a project or gig-based manner. Focus on skills development for internal mobility.

• Skills-based performance and rewards: Link performance and rewards to the attainment or application of skills, fostering a culture of skills development.

• Skills-based development and talent management: Focus on building required skills within the organization rather than role-specific development. This approach allows for quicker and broader capability building.

Start with practices that are easier to implement, such as learning and development, to embed a skills development culture.

Step 8: Help individuals build a skills portfolio

Encourage and support individuals to develop skills required within the organization. Provide transparent, equitable, and accessible development opportunities. Embed skills-based approaches in HR practices to actively promote the development of these skills, ensuring employees can expand their capabilities beyond traditional roles.

Step 9: Implement transparency and visibility of skills

Democratize skills data and ensure individuals maintain it. Use technology to manage detailed data and continuously collect and validate information. Encourage employees to share and maintain their skills data by showing clear benefits, such as career progression and development opportunities. Collect and validate skills data during key moments in the employee lifecycle, such as before development conversations or workforce planning cycles.

Step 10: Manage the transition and change

Adopting a skills-based approach requires a mindset shift and continuous, iterative processes. Bring stakeholders along the journey by starting small, iterating, realigning, and showcasing success stories as proof of concept. Link outcomes back to the business case and demonstrate how benefits are being realized. Ensure strong executive sponsorship and support to embed skills-based practices into the organization's DNA and approach to work.

You can read the full guide by visiting The Academy to Innovate HR website.

Contact SkyHive by Cornerstone for leading information on skills intelligence and skills-based workforce transformation to help build an agile workforce today.