Transitioning to a Skills-Based Organization: First Steps (Part 3)

Skills Series Part 3: HR's Role in Pivoting to a Skills-Based Organization

Skills-based strategies are a critical consideration for businesses facing the most intense competition for skills (for example, knowledge-based sectors such as banking, technology and pharmaceuticals) or operating in highly unpredictable and changing markets (for example, manufacturing firms introducing smart technology and AI-based solutions to their customers). Our research suggests that skills-based approaches are being used in three specific areas—to ensure succession into critical roles, build new organizational capability (for example, digital marketing, data analytics), or create new products or services through technology. In terms of impact on business outcomes, this is still a new approach, but there is convincing evidence of the return on investment from various skills building initiatives. Companies with advanced reskilling and upskilling programs, for instance, report greater business growth, higher workforce productivity, and stronger employee engagement.

The Conference Board defines a skills-based organization in the following way: Skills-based organizations define how work is accomplished by deconstructing roles and jobs into critical tasks and outcomes and identifying the current and emerging human skills required to complete the work. For these organizations, skills become the center of the talent strategy, in place of, or alongside, the traditional structure of jobs, enabled by intelligent technology.

Insights for What’s Ahead

Transitioning to a skill-based organization provides CHROs with a unique opportunity to place skills building at the heart of talent strategies. While the CEO and C-suite must have ownership of the skills agenda to drive the change across the organization, the CHRO has prime accountability for formulating the skills strategy and driving the transition by ensuring leadership buy-in. The CHRO must also decide whether and how to redesign key people processes primarily around skills instead of jobs to make their organizations more responsive to labor shortage. Our research shows that CHROs and their teams must tackle two challenges—successfully embedding an enterprise-wide language of skills; and aligning skills with an organizational framework (aka the job architecture) for understanding the roles within a company.

• Build new capability in the people function. in the area of skills analysis and planning, including data analytics and AI-based HR technology tools. These skills are critical in workforce planning, talent attraction and development, and the HR Business Partner role to break out of siloed thinking and take a holistic perspective on skills across the organization.
• Build new skills strategies into critical people processes. Base the strategic decision on the extent to which job architectures and competency frameworks are out of kilter with the needs of the business, for example, by providing insufficient visibility into the skills the business needs to deliver its strategy and growth ambitions, and impeding a holistic approach to skills building.
• Reorganize talent teams and processes around skills to improve performance and responsiveness. When the majority of the business has shifted to more dynamic or agile ways of working that depend on workers with the right skills “flowing” to the right work or projects, consider breaking down traditional functional silos in the People Function. One way is to create cross-functional teams responsible for forecasting the most critical skills likely to be needed, as well as effective strategies for skills development and internal mobility.