Transitioning to a Skills-Based Organization: First Steps (Part 2)

Skills Series Part 2: Getting the Business on Board

With future-critical skills in high demand and short supply, companies can’t rely on recruitment to meet their growth plans. Nor can companies easily predict or train workers for the new roles that might emerge. Faced with these challenges many companies are taking a new approach—implementing a skills-based strategy. Though such an approach is complex and takes time, it can offer organizations important benefits, including improved key business outcomes, better skills intelligence, vital insight into skills gaps, and improved talent engagement and retention for those workers who want to work for organizations that invest in keeping their skills relevant.

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

While businesses have been using skills for decades to define work, what is different now is the speed of change and the digital, intelligent technology driving it. The most basic unit of work—tasks—are changing rapidly and exponentially. The complexity and static nature of jobs are being challenged. So, the elemental aspect of workers—their capabilities—must also be revisited.

A skills-based approach is a major change effort. Implementing the strategy is complex and takes time. C-suite leaders must provide strategic direction, and senior business leaders must commit to an enterprise-wide, future-focused plan to avoid piecemeal or conflicting approaches. In the early stage of the transition, the HR function must bring together different coalitions of stakeholders (operational leaders, finance and IT, commercial suppliers) to ensure successful design and implementation.

A successful transition to being a skills-based organization requires:

1. Articulating the business case

• Explicitly link a skills-based approach to business strategy and capability. Spell out the skill sets workers will need in the medium term to ensure the business can meet its strategy—achieving financial goals, growth ambitions, sustainability commitments, and diversity targets.
• Discuss skills in the context of the competition for talent. Draw on external data to project future supply and demand trends for workers with critical skills.
• Analyze reskilling and upskilling in terms of cost, providing dollar value demonstrating the costs and savings of developing existing workers instead of recruiting externally.
• Use visuals and storytelling as well as robust data to build a strong narrative of the benefits and risks of a skills-led strategy.

2. Building Capability in Skills Intelligence

• Consider Investing in a portfolio of technologies to mine large volumes of real-time skills data, in order to spot demand for new skills and put a market value on “hot” skills. Seek answers to questions such as: What new jobs will emerge in the next 5 to 10 years? How are existing jobs evolving? How are skills combining in new and unexpected ways?

3. Creating Buy-in and Momentum

• Prioritize initiatives that support strategic priorities or core competitive capabilities.
• Establish a global skills governance forum made of C-suite executives, senior business leaders, and key senior leaders from support functions such as HR, IT, and finance.
• Chief Human resource Officers (CHROs) need to establish a regular cadence with business leaders to discuss skills challenges and to showcase the impact of any skills-based pilots. Consider partnering with Trade Unions and Works Councils to create a shared agenda and address any concerns about hidden agendas (particularly the suspicion that the real goal is replacing workers with technology).
• Support and scale up successful local skills initiatives.