Skills-Based Organizations have a more agile and employee-centric approach to work where employees are valued for their skills rather than their job title, level, or educational qualifications. It is a new operating model of work where employees are matched to tasks and projects based on skills, capabilities, and interests. Focusing on skill sets instead of job experience can help organizations optimize their talent pool. Skills-Based Organizations are moving away from traditional job structures and adopting agile talent development starategies. They have flatter, team-based structures with leaner job architectures, i.e., fewer levels and job titles and broader pay structures.
Conversations with our clients have indicated that HR Leaders are starting to explore skills-based talent strategies. However, Fuel50’s Global Talent Mobility Best Practice Research revealed that 25 percent of HR teams currently have no visibility of their talent bench strength (i.e., the skills and capabilities) across their organization. In support of this, Mercer’s Global Talent Trends Study observed that organizations are beginning to dig deeper to understand their skills. But the majority are only just starting on this path.
There is also growing interested in returning to skills-based pay models, but few organizations have figured out how to approach this. According to Christine du Plessis, Head of Workforce Architecture at Fuel50, credentialing, skills validation, and block-chain modeling may be strategies to shift remuneration to support a more skills-centric work model in the future.
Fuel50’s Global Talent Mobility Best Practice Research found a strong positive correlation between compensating and rewarding the development of new skills and critical business outcomes like revenue per employee, overall business revenues, employee engagement, and retention.
Value me: Ensure diversity and inclusion is a top priority
Prioritize: The organization makes employee development a strategic priority
Lead me: Get leaders talking and role modeling development, reskilling, and upskilling
Allow me to learn: Ensure all have access to learning new skills and experience in their roles
Recognize: Compensate or reward the development of new skills
But ultimately, although this is a trending topic, very few organizations have successfully transitioned to being skills-based.
How to transform to become a Skills-Based Organization
We are at a time when talent optimization and internal mobility are more critical than ever for business agility and continuity. We anticipate interest will continue to grow for Skills-Based Organizations, so to support HR professionals on this journey, we have outlined some critical considerations:
- Implement a more flexible, agile job architecture: Many organizations are transitioning to a new operating work model, moving away from hierarchical job architectures to something more agile and fluid. In our recent research, we saw that 35 percent of organizations surveyed had already simplified to a flat organizational structure, while 25.5 percent had no intention of doing this. A further 24.5 percent of organizations said they would opt for a more agile skills project-based workforce in the next 12 months. Flexible, agile organizations are quick to mobilize, nimble, highly collaborative, responsive, have free-flowing information and empower people to act. In contrast, traditional job architectures can struggle to stay up-to-date and respond to the organization’s changing needs. Today’s AI-enabled architectures, as supported by Fuel50’s Talent Blueprint methodology and market data feeds, provide a mechanism to stay agile and relevant as organizations evolve. In the first instance, moving to more project-based work units is a start where skills are matched at the project level, as enabled by the Fuel50 Gigs functionality. This feature creates a valuable starting point, using talent marketplace technology to deliver visibility, keep track of skills and facilitate more agile working practices by enabling skills matching at the project level. It also lays the foundation for structural changes in the future. In the future, we will likely see skills as a foundational unit of currency in the organization. Larry McAlister, VP of Global Talent at NetApp, is already adopting this future-focused approach, “We want to say, in our internal marketplace, that skills are the new currency. There is growth to be had in so many different directions.”
- Taking a skills-based approach to talent development: Deloitte’s Human Capital blog emphasizes that organizations need to consider the following critical principles 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 talent.
- Design compensation policies based on skills.
- Include skills intelligence into succession planning.
- Leverage technology to help create visibility and keep track of skills development progress.
Our Capability Trends Research report has identified some transformational capabilities to support organizations in shifting to skills-based organizations. A skills-based approach enhances talent development strategies by:
- Creating visibility of 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 management strategies include skills management strategies that enable upskilling and reskilling.
- Implement agile methodologies: Agile methodologies are a huge enabler for the success of skills-based organizations. High-performing organizations have adopted agile core values. These organizations prioritize individuals and interactions over processes and tools, customer collaboration over contract negotiation, and responding to change over following a plan. A Skills-Based Organization optimizes organizational, talent, and career agility.
Before an organization can effectively offer employees the right learning opportunities, it needs the ability to view their available skill sets to determine critical areas for growth. While this sounds like a difficult task, new tools and technologies, such as AI-powered talent marketplace platforms, can provide companies with insight into the skillsets of their employees. With this technology, organizations can better identify knowledge gaps in their workforce or discover underutilized employee skills.
By combining all this knowledge, organizations can develop career roadmaps for their employees, demonstrating all their available opportunities. These pathways show how different skills or training can lead to various organizational opportunities. Not only does this help employees gain a more robust understanding of their career potential, but it also helps employers demonstrate a strong commitment to developing their employees’ careers.
Your Change Imperative
The pandemic has fundamentally changed the workplace, with hybrid and remote arrangements now becoming a standard practice. These changes mean that employees will require new skills to succeed in these evolving work environments. Offering employees the right skills training will be a crucial undertaking for organizations looking to thrive in the future of work, and with the right learning marketplace, this can be an easy task.