As we round out yet another year, we’ve been reflecting on what’s been top of mind for HR leaders in 2023. Unsurprisingly, one of the primary focuses has been on skills and skill-centricity.
According to Fuel50 CEO and Founder, Anne Fulton, when labor researchers look back on this chapter in time, they will likely deem it ‘the era of skills’. As more organizations realize the importance of skill-centricity, it’s becoming increasingly clear how pivotal this approach will be now and for years to come.
The Journey Toward a Skill-Centric Workforce Continues
This renewed focus on skills comes at a time where markets are fast-changing, volatile, and unpredictable. Organizations desperately need an approach that supports more agile, fluid, and adaptable ways of working. A skill-centric approach provides just that – a strategy that enables organizations to thrive through uncertainty and embrace change as an opportunity.
According to McKinsey, companies have realized that skills-based practices are a powerful solution to challenges that have intensified since the pandemic. While it has been almost 4 years since the height of COVID-19, many of its associated challenges are still present today – skills and talent shortages remain at play, economic uncertainty is still a concern, and organizations continue to experience high turnover, lower levels of engagement, and reduced retention.
The concept of a skills-based organization is paving a new way forward, with Deloitte research finding that organizations focused on skills are 107% more likely to place talent effectively, 57% more likely to anticipate change and respond effectively, and 98% more likely to retain high performers. Now that 89% of HR leaders recognize skills as an important element in how organizations define work, deploy workers, manage careers, and value workers – the global switch to skill-centricity is inevitable.
Research is showing that a skills-centric model allows companies to be more agile, productive, and innovative – which are really the key ingredients for superior business performance. – Roel Deuss, VP of Product Marketing, Fuel50
Addressing HR’s Ultimate Challenge: Employee Retention
The retention of employees also remained top of mind for HR leaders this year, with LinkedIn Learning’s 2023 report stating that 93% of organizations cite it as a top business concern. This number is staggering, confirming just how critical it is for leaders to address the issue promptly.
Research by HBR found a lack of progression as one of the primary reasons employees leave. In fact, 86% of professionals said they would change jobs if a new company offered them more development opportunities.
Failing to provide adequate opportunities for growth and progression is now a significant risk, often resulting in employees quitting to find those opportunities elsewhere. The onus here lies with the organization to provide internal career development and skill-building opportunities to ensure employees stay engaged and motivated.
Deloitte points out that a skills-based approach can help as it frees employees from being defined by their jobs, and instead sees them as whole individuals with skills and capabilities that can be deployed to work that matches their goals and interests. Their research also indicates that skill-centric organizations are 98% more likely to have a reputation as a great place to grow and develop.
This approach opens up doorways for employee progression and prioritizes filling positions internally, fostering a culture that encourages talent mobility and supports employee retention.
Through a skills-based approach, companies can boost the number and quality of applicants who apply to open positions and can assist workers to find more opportunities to advance internally, which can help employers improve retention.
– McKinsey Research
As We Look to the Future, Deeper Skills Visibility will be Paramount
As skill-centricity continues to drive conversations within the HR space, adopting technology that offers deeper skills visibility will be paramount. Truly understanding the skills currently present within the organization and what skills are needed for the future will enable HR teams to pinpoint critical skills gaps and take proactive action in filling them.
This offers a win for all stakeholders, as the organization can begin to provide personalized growth and development opportunities which is essential for employee retention, while also building a workforce that can meet current and future organizational objectives. It’s becoming increasingly clear that a skills-first mindset will be the ultimate key to success in 2024 and beyond.