4 steps to jump-start your skills-based strategy

Organizations looking for an edge need to use skills as a primary talent strategy. Here are four steps to get started.

4 steps to jump-start your skills-based strategy

Extreme talent shortages and growing worker demands are causing organizations to rethink how they define and hire for jobs. To meet these growing challenges, 98 percent of organizations plan on moving toward becoming a skills-based organization, according to research from Deloitte.

What is a skills-based organization? In short, it’s a framework for talent decisions that centers around skills. By breaking down jobs into more granular elements — including skills, strengths, and aptitudes — organizations gain a clearer, more holistic picture of both the skills a job requires and how any given employee’s capabilities match with those requirements.

With this data-driven picture of work and workers, businesses can see which skills they currently have, which skills they lack, and strategically address any gaps. Not only does this help employers, but it also gives employees newfound agency. When workers can see their proficiencies and what they need to develop to reach the next level, they can focus their time, training, and development where it matters most. This fuels productivity and helps organizations gain and retain relevant skills.

89% of HR and business leaders say skills are becoming more important for the way organizations are defining work, deploying workers, managing careers, and valuing workers. — Deloitte

In a recent webinar, Eightfold’s Head of Talent Strategy and Innovation, Andrea Shiah, joined Deloitte’s Sona Manzo, Managing Director, Workforce Transformation, and Sue Cantrell, VP, Products, Workforce Strategies, to discuss this changing nature of work and the rise of skills-based strategies. Here are a few key takeaways from their discussion.

Related: Read our latest ebook, “How to build an agile workforce with a skills-based approach.” 

The nature of work is changing

For years, work has been viewed through the lens of formal jobs, a static list of responsibilities that typically doesn’t account for changing needs or future skills. But how organizations think about jobs is quickly evolving. Many are moving to more fluid and flexible ways of organizing work where the emphasis is on value and outcomes.

71% of employees say they do work outside the scope of their job description. — Deloitte

Technological advancements have redefined both the workforce and how organizations hire. Today, there are full-time employees, contingent workers, free agents, crowds, gig workers, and alliance workers — even AI and robotics are a kind of digital worker. 

And how organizations access those workers looks vastly different than ever. Organizations may hire externally or reskill, upskill, or promote internal talent. They may even engage service providers or participate in cross-company talent exchanges where companies “borrow” workers from other organizations. To address the evolving nature of work, skills are becoming increasingly vital.

The nature of work is changing

Skills are the foundation of a new talent ecosystem

Making the shift to a skills-based approach requires thinking about workers as a combination of their skills, capabilities, and other unique attributes.

We use skills to make decisions about the way we organize work and allocate resources to work,” Deloitte’s Cantrell said. “Our workforce decisions center more on skills and less on jobs, all to enable people to do their best work by applying their unique skills and talents to deliver outcomes that matter.”

Hard skills, technical abilities like coding or accounting, are important to consider, but so are human capabilities, often called soft skills, such as emotional intelligence, collaboration, and critical thinking.

Adjacent skills are considered equally important. Skills closely related to existing skills can be more easily discovered with the right technology, like an AI-powered talent intelligence platform. This can be a differentiator when recruiting for skills that face huge competition, increasing the pool of potential candidates. Adjacent skills are also extremely useful in developing strategies to address disruptions and determine how to best engage existing talent in an organization to meet current and future needs.

Why organizations are shifting to a skills-based approach

According to Deloitte’s global survey of over 1,000 workers and 200 business and HR executives, the top drivers for pursuing skills-based practices included talent shortages (70%) and the growing demands of workers to have agency over their careers (68%).

If overcoming these challenges wasn’t enough incentive, statistical analysis showed that organizations that used skills-based practices were 107 percent more likely to place talent effectively and 98 percent more likely to retain high performers. Other benefits included the ability to nurture a culture of growth and achieve greater organizational agility, innovation, and efficiency.

Why organizations are shifting to a skills-based approach

4 steps to implementing a skills-based talent strategy

While there are countless reasons to implement a skills-based strategy, the most important thing is getting started — even if it’s just in one or two areas. Deloitte’s Manzo and Cantrell shared four concrete steps to help organizations begin the journey.

1. Develop a workforce of one

According to Deloitte’s research, only 26 percent of workers strongly agree that their employers treat them as unique individuals with their own portfolios of skills. Likewise, only 26 percent strongly agree that their employers are using their skills and capabilities to their fullest potential — leaving the vast majority of workers performing at suboptimal levels.

“Imagine the value we could unlock not only for workers but for our own organizations if we could enable the use of those skills and capabilities that workers have, which are often obscured by the job,” Cantrell said.

Developing a workforce of one requires seeing employees as individuals.

2. Use skills to make talent decisions about work and the workforce

Shifting to a skills-based model involves reimagining every workforce practice, from performance management to rewards and hiring. Organizations need to abandon old constructs and ideas, like how long someone has to be in a role before they can apply for something new within the organization.

This won’t be an easy shift, but the results will be worth it. People absolutely want to work at places where they can grow, and retention skyrockets when those opportunities are provided. From a business-outcome perspective, in addition to greater retention and a more robust culture, a skills-based approach helps unlock a tremendous amount of untapped productivity.

 3. Liberate work and workers from the confines of the job

When asked about the best way to organize work, traditional work came in last for both workers and business leader respondents. While there will always be a place for the traditional job, the aperture is expanding for thinking about and organizing work. There are two key ways to do this.

“One is called fractionalizing work,” Cantrell said. “Breaking down work into narrower pieces, projects, tasks, assignments, and then being able to allow workers to flexibly flow to them based on their skills and interests. … Almost always, it’s what I call partial fractionalization, which is where workers still have their core job, but they take some amount of time to do work through a project or task elsewhere in the organization.”

The second approach is called broadening work, which “is really about going the other way and broadening the role and structuring it around problems to be solved or outcomes to be achieved.” An example could be a company where workers don’t have defined roles. “They don’t have jobs at all and authority and pay are based on their skills, expertise, and the value created.”

4. Build a “skills hub”

Skills hubs are the engines behind skills-based talent strategies. They include skills data, technology, and governance. Building a skills hub requires a common language for skills and a unified skill framework or taxonomy.

Typically, the CHRO is the primary owner of the skill hubs, but 90 percent of business and HR leaders surveyed said that moving to a skills-based organization is going to require a transformation for all functions. Finance, procurement, strategy, and operation leaders are each going to need to structure and organize work in a more fluid way. The end result is going to take HR away from managing employees and jobs and push them toward orchestrating work in a more fluid way.

While the future of work may be uncertain, using a skills-based lens to hire, train, and retain talent will give organizations the best chances of success.

Listen to the entire conversation in the webinar, “Architecting the future of workforce ecosystems with skills-based strategies,” to learn more about building a skills-based talent strategy.

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