As the world of work continues to evolve due to global and economic changes, it has become imperative for organizations to adopt an agile and adaptable approach to ways of working. This is where the need for skills-based organizations comes in – a more agile and employee-centric organization where employees are valued for their skills rather than their job title, level, or educational qualifications.
Shifting from a traditional job-based talent strategy to a skills-based strategy enables these organizations to respond to change quickly and more effectively, giving them a competitive advantage in today’s unpredictable environment.
The Future of Work Requires Skills-Based Organizations
For decades, jobs have been at the core of how we define work – dictating how work is done and by whom, as well as how employees are supported and compensated. According to Deloitte, having a primary focus on jobs “hinders some of today’s most critical organizational objectives: organizational agility, growth, and innovation; diversity, inclusion, and equity; and the ability to offer a positive workforce experience for people.”
To successfully navigate today’s work environment, organizations must steer clear of traditional job structures and implement more modern ways of managing talent. A skills-based strategy is a new model of work where employees are matched to tasks and projects based on their skills, capabilities, and interests as opposed to their job titles. Further research by Deloitte indicates: organizations that take this approach achieve better business results than those with job-based practices as they are 98% more likely to retain high performers, 52% more likely to innovate, and 49% more likely to improve processes and maximize efficiency.
The Benefits of Skills-Based Talent Strategies
Leaders in skills-based organizations can optimize their existing workforce and better prepare themselves and their people for the future. Fuel50’s Capability Trends Report highlights some of the key benefits of skills-based strategies, including:
- Wider talent pools: Valuing employees for their skills rather than their job titles widens an organization’s talent pool. Skills-powered talent marketplaces like Fuel50 give organizations clear visibility into the skills available within their workforce, allowing HR to fill internal positions accordingly and reduce the impact of talent shortages.
- Enhanced career growth and learning opportunities: Skills-based organizations foster a culture of skill-building, learning, and growth. Adopting this approach encourages employees to grow their skill sets and opens up career experiences and pathways that may not have been possible in a job-based environment.
- Reduced bias: Focusing on skills rather than job experience provides a more objective assessment of talent when hiring for open positions and reduces unconscious biases that may be embedded within your hiring processes.
- Organizational agility: Organizations that embrace dynamic skills-based strategies are better equipped to pivot and handle changes more efficiently and rapidly. Breaking away from confining people to singular roles gives HR the ability to reallocate, upskill and reskill talent as and when needed.
How to Transform into a Skills-Based Organization
As HR professionals begin to realize the power of skills-based talent strategies, more organizations are embracing skills as the new way of managing talent to better support employees and drive business impact. Here are 3 key steps to help you transition into a skills-based organization:
1. Implement a more flexible, agile workforce architecture
Shifting from a job-based mindset to a skills-based mindset requires a major re-evaluation of your career framework. Traditional job architectures are built with a focus on role descriptions that are categorized based on the qualifications and/or certifications required for each specific role. The first step is to update your career framework to be skills-centric by reviewing all role descriptions and updating them with the skills needed for each role.
While this may seem like a huge undertaking, Fuel50’s talent marketplace and dedicated team of workforce architects make the process easier by supporting the modernization of your career framework and transforming hierarchical job architectures to a flatter and more agile organizational structure. Once the process is complete, skills become the new focus within your organization, enabling you to match employee skills to internal opportunities, vacancies, and projects to promote workforce agility, cross-functional collaboration, and talent mobility.
2. Take a skills-based approach to talent development
Now that you have a modernized workforce architecture in place, you can strengthen your workforce with a skills-based approach to talent development. The key here is to build skills transparency across your organization to allow employees to understand the skills they need now and in the future. A talent marketplace supports this by highlighting the skills you currently have within your organization and identifying the skills gaps that need to be filled. Training and development plans can then be aligned accordingly to support the growth of employees as well as the needs of the organization.
A skills-based approach enhances talent development by:
- Creating visibility of the skills across the organization
- Highlighting skills gaps, allowing organizations to plan upskilling initiatives
- Creating a common organization-wide approach to skills and talent management
- Transforming talent strategies to include skills management strategies that enable upskilling and reskilling
3. Implement agile methodologies
Agile methodologies contribute to the success of skills-based organizations, so it is important to embrace core agile values across your organization. This includes prioritizing individuals and interactions over processes and tools and prioritizing responding to change over following a plan.
According to McKinsey Research, agile organizations cultivate a “people-centered culture and operate in rapid learning and fast decision cycles which are enabled by technology, and a common purpose that co-creates value for all stakeholders.” Leaders must encourage these ideals by embracing change, facilitating collaboration, and advocating talent mobility.
Tips to Ensure Your Transformation is Successful
In addition to the key steps above it’s important to adopt a skills-based mindset throughout your organization. Deloitte highlights the following critical principles needed for a skills-based approach to be successful:
- Creating a common language of skills across the organization.
- Performance management needs to include skills application and development.
- Leveraging talent marketplaces that match skills to jobs, tasks, projects, gigs, and mentoring assignments.
- Learning and development programs should be designed on skills, not jobs.
- Adopt a skills-based approach to recruiting
- Design compensation policies based on skills.
- Include skills into succession planning.
- Leverage technology to help create visibility and keep track of skills development progress.
While transforming into a skills-based organization can seem daunting, a skills-powered talent marketplace is a powerful tool that can support these changes and help ensure the transition is as seamless as possible. As a result, your organization will build the agility it needs to keep up with the rapid changes we are facing today and in the future. If you want to learn more about how Fuel50 can help you transform into a skills-based organization, request a demo here.
