The potential of pay for skills: Future proofing your workforce

Attracting and retaining skills to maintain a competitive advantage can be a challenge. Now is the time to get your organization future-ready.

The potential of pay for skills: Future proofing your workforce

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Attracting and retaining key skills to maintain a competitive advantage in today’s highly competitive and cost-conscious environment can be a significant challenge.

In this webinar with Mercer and Eightfold AI, you’ll learn how a data-driven approach to pay for skills could be the key to your organization’s ability to attract and retain key talent.

We’ll share results from Mercer’s most recent Pay for Skill survey – and highlight common obstacles and key considerations for designing your pay for skills strategy.

Jason Cerrato 0:08
We’re so excited to be here today. The team that you see here in front of you has been working on the content that will walk you through over the next hour. And we are looking forward to a very robust discussion. First, quickly introduce myself as mentioned, I’m Jason Cerrato. I’m a member of the Eightfold product team. In a former life I was in an HR executive leading talent acquisition, also have served as an industry analyst. And now have joined the Eightfold team. To quickly introduce everyone that’s on the call. We’ll start with the Eightfold side. Hey, Jim, would you like to introduce yourself?

Hicham Zahr 0:43
Absolutely. Thank you for the opportunity. And thank you. Thanks, Jason. My name is Shams R and I’m the VP of Product Management at Eightfold AI focusing on insights and analytics and analytics. My team and I have the opportunity to dive into our global dataset and extract trends and derive insights from that prior to joining Eightfold I worked in consulting and worked with McKinsey focusing on digital transformation. I also worked with Gartner as part of their high-tech client services. Glad to be here to talk about this important topic.

Jason Cerrato 1:15
Next, I’ll hand it over to Brian, Brian.

Brian Fisher 1:19
Sure. Thanks, Jason. Hi, I’m Brian Fisher. I’m the Global Solution leader for skills frameworks at Mercer, which what I do is I help clients advanced skill-based practices around the globe. This does include use cases for skills like strategic workforce planning, talent, marketplace career pathing. And yes, our topic of the day – pay for skills. And a lot of the advancement in pay for skills has been buoyed by some of Mercer’s products in this space that Peter is very close to Peter.

Peter Stevenson 1:54
Yeah, thanks, Brian. Hi, everyone. My name is Peter. I’m based in the UK in the northwest of the country near to Liverpool and Manchester. I’m the go to market leader for skills products at Mercer. I’ve been with the company for about 12 years, I’ve had various roles. But for the last three years, I’ve been focused exclusively on skills and skills products, which I’m enjoying very much. It’s a very exciting subject matter area to be working in. And on today’s webcast, I’m going to be bringing some statistics and observations from our skills snapshot survey to the conversation. So more on that later.

Jason Cerrato 2:30
Okay, so today, the topic of the hour is the potential of pay for skills future proofing your workforce. I’ve spent the first part of this year on various webinars, podcasts traveling the country for executive roundtables. And a theme that I keep hearing and questions that we keep discussing is How can organizations become skill-based organizations as part of their talent transformation to align with all the digital transformation that we’ve been undergoing the past few years, and a key part of this now is extending into a pay for skills conversation. So, as we walk through the content today, we will be tackling that element of how organizations can go on their skill-based journey. So, the first step is I’d like to hand it over to Brian to start the conversation with a poll.

Brian Fisher 3:21
Yes, so you’ve heard a little bit about us on our intros. Let’s hear a little bit about you. So, if you could, I think the poll will be launched, as described on the website, which best describes your current feelings about skills and you select one they range from, you’ve heard and you’ve read about the importance of skills be Don’t worry, I don’t know where to start to even the extreme that I’m so sick of hearing about this skills topic. But I joined anyway, which might say a lot about you being a glutton for punishment, because that is the topic of the day. So, I believe that all has now been launched. And we’d love to see how this group is coming out.

Unknown Speaker 4:12
Power of showbusiness,

Unknown Speaker 4:13
let’s see the results come in.

Brian Fisher 4:14
That’s right. We know knowing where to start JC I’m sure that you’ve, you’ve experienced this a lot in your work with companies that it’s acknowledged that it’s important. Heck, we’ve had we’ve had some clients where the CEO has said skills of new currency of work, make it happen. And that was what was brought to us to say you’re making it happen to you know, oftentimes is more about the there is a true business case that’s actually bubbled up from the business, from teams from departments on skills, but it does seem to be a big challenge is knowing where to start. Anything else. Jason

Jason Cerrato 4:59
be I’ve well I think a lot of the discussions that I’ve been involved in with CHR o roundtables and executive roundtables, people have come around to understand the why. But there’s still a lot of questions around the what and the how, right. So hopefully, we’ll go through some of that today. But it looks like our audience today is maybe in some of that same position, you know, they don’t know where to start or looks like they would benefit from some fresh thinking. So very much in line with some of the discussions we’ve had, you know, around the country, and actually on the Eightfold side around the world. So next, we’ll walk you through the agenda. So, in today’s presentation, we’ll covering establishing the business case for a pay for skills approach, generating the skills intelligence needed to put that plan into action, and then developing the approaches and programs to deliver this and operationalize it for your organization. So, with that, we will start with how to help establish the business case. So, the first part of this is a little bit of acknowledging, you know, the why. And with that, you know, everyone today is faced with this imperative. How do we deal with transforming our organizations, whether we are in an industry that is being disrupted, or we are an organization that is currently pivoting, and developing new product lines, or developing ways to deliver to our customers in new ways. At the same time, we are challenged with skill shortages in certain areas, and skill abundance and other areas that may be declining or may no longer be needed. So, it creates this tight supply of talent pools for critical skills that a lot of organizations are all going after, regardless of their industry, regardless of them of their product line. So, all of this is being done also in the face of very uncertain times. Right. And as you’re planning for this, one of the one of the chief threats to planning is uncertainty. So, we’ve all gone through headcount reduction, or containment. And if you’ve ever worked in talent, and an HR, you’re used to the phrase, hurry up and stop, and hurry up and stop. So how do you do all of that together? So, a big part of this discussion is kind of putting together a strategy and a plan for understanding through a better lens. What skills do you currently have in your organization? What skills do you currently need, you know, as compared to maybe your industry or benchmark companies? Or to align with your business strategy? From there? How do you take advantage of the employees, you already have to potentially upskill them or redeploy them? And how do you understand things like skill, adjacencies, or potential or learn ability to just understand how skills map to other skills and how employees can be redeployed or moved into other areas? You know, a common theme of the last year has been upskilling. And we’ll talk a little bit about that today. And then, as you put all this together, obviously, the next link is how do we put together our talent and rewards program to support this strategy, encourage this type of behavior and movement, and align with the talent we’re trying to develop and retain for the future? Right. All of that sounds like a lot. It is a lot. I think that’s why everyone is, you know, challenged with where to start or how to start. But that’s also why we have, you know, robust discussion planned for you today. So first, first, we’ll start with maybe how this has been done in the past with a look towards the future. So, Brian, I’ll hand it over to you.

Brian Fisher 8:47
Yeah, no, thanks. I mean, that last question of how should rewards support this skills agenda? And one might ask, should it? Is that being those total rewards? Or is that rewards and pays job to do that? And so, in order to answer that question, let’s go and take a look back at how pay strategies reward strategies have evolved over time. Right, the 50s and 60s, largely a wage and salary environment, there was very little variation among worker pay, and therefore, what was valued and what took priority was this, this, you know, the focus on internal equity? Right? In certainly you needed to be you needed to offer a competitive wage, but there was more importance on, you know, being consistent and in similar to others now. What, back then in the 50s and 60s, certainly, if you would have asked, How does your pay programs support performance or development that may have fallen on deaf ears and then so as we advance forward in the 19, to the 1980s, you know, the biggest move and I’m talking about The purple dot here, if you’re going across the page, the biggest move was paid for performance, right, the increase in bonuses and profit sharing. But also, you know, the workforce was beginning to evolve from an employer for life mentality to populations of workers that were, you know, moving from company to company through their career, and that increase the importance of the external market or being externally competitive, which is that green dot, right. By the way, this is a representation of a global comp philosophies over time, I would say it’s a little bit US centric, on the pacing of this, but it would apply globally with so a few nuances, I would say, there. But so, as we move from the 1980s, to the 2000s, while competitiveness and pay for performance continue to be primary, the importance of internal equity and supporting development began to grow. Now, simple evidence of that was the growth in pay equity legislation. And the focus on career frameworks. And when I say career frameworks, especially in the early 2000s, this was really centered around the idea of intentionally structuring your jobs in a job architecture, to support both growth in careers, and also compensation. Now that lands are over here and, in this decade, right. And we’re in an environment where being market aligned and performance based is no less important. But it’s also a time where you reward rewards programs, if they’re not proactively strengthening fairness and equity. And they’re not intentionally promoting skill development, you might be caught on your heels, because of the contemporary pay philosophy. Your balance is all for now, we could talk at length about today’s modern comp models. But today, we really want to focus on how companies can promote and reward skill development, that fourth pillar there. Now, Peter, from the surveys, the survey you alluded to earlier, Did we learn anything about why companies are linking rewards to skills?

Peter Stevenson 12:26
Yeah, thanks, Brian. Yeah, we definitely did. And but before I answer your question, I’m going to start by providing this group with a bit of related context here. So, I’ve been running Mercer skills snapshot survey since 2020. And in it, we collect benchmarking data from mainly multinational companies, with the idea of uncovering key trends, challenges, opportunities, around skills-based talent practices, and also looking at market progress year over year. Now, the numbers of survey participants that we’ve received has grown hugely over the last few years to the point where I think we had 650 Plus participants globally in 2020. And that’s, you know, across all industries. And I think this really demonstrates how much interest has grown in the skills topic over the last few years. And also, you know, how much excitement there is around skills today. So, the 2023 survey has just been launched. Now, it’s open until 31st. of May. And all participants receive a free Insights report when we publish in early September. So, you know, every everyone listening into this call, you’re very much invited to submit data, you can use the QR code that you see on the side of the slide, to link out to the survey. And of course, you know, these slides are going to be included in the webcast follow up collateral. But, you know, looping back to Brian, what you what you were saying about, you know, why companies are linking rewards to skills and the need to balance contemporary pay philosophies. I think this is very much reflected in the data that you can see on screen now. So, we asked our snapshot survey participants, what are your objectives in linking rewards to skills? And I should note, by the way, that the responses add up to more than 100% as respondents were able to select more than one response. Okay. And you can see that by far the most common answer was to attract and retain premium skills with about 80% of respondents selecting that answer. So, the focus really is about getting the right skills into the company, as opposed to for example, you know, cost containment. In addition to this, nearly 50% of companies selected, incentivize skill development and incentivize career progression. And these are very much aligned to the promotion of skill development thing, which Brian mentioned earlier. Now, on the other side of the fence, about 46% of respondents cited their fair approach to pay as being a motivating factor which of course some links to equity. Right. So, burger that’s some summary from the slides, Brian, anything that you would have hit?

Brian Fisher 15:08
No, I think that that’s, you know, I think it’s a matter of determining what is the objective and we’ll talk more about different paid practices. But you have to have your objectives clear, so that you can ultimately measure the success of that, you know, of those practices of those programs that you put in place. Not Thank you.

Jason Cerrato 15:31
So, part of what brings us together today with Eightfold and Mercer is if you look at these results, and you look at even the first three, attract and retain premium skills, incentivize career progression, incentivize skills development, well, how do you do that? How do you identify those premium skills? How do you build together a plan to incentivize that progression? And what progression? Is it? What does it look like to what skills? So, the next section of our conversation today, we’re going to start to engage Hisham, from the Eightfold team to talk about how organizations can leverage talent intelligence for skills intelligence?

Hicham Zahr 16:10
Thank you, Jason. So, for those who know me, I’m really passionate about transformations, analytics and skills. My team and I are very happy and grateful to have access to the largest global talent data set that Eightfold has. So again, but you cannot invite me to such an event and not expect me to talk about transformation, right? I am, you know, I love transformation, digital transformation, digital business transformation, whatever you want to call it, I strongly believe that companies need to transform regularly for them to compete and stay relevant. But to improve the chances of success of a transformation, you need to have the right talent. Every transformation we know is broken down into initiative. And every initiative has a budget, which also includes budget for talent. And this can be for talent acquisition, upscaling rescaling or even contracting and such talent needs to have the right skills that are needed to successfully deliver on their transformation. It’s not about the role anymore, it’s about the skills that that individual is going to bring. Before the emergence of the talent intelligence platform. The talent needed to deliver on the transformation was expressed in terms of years of experience, previous work, and so on. But that wasn’t enough. Just because someone has x years of experience or worked in certain industry doesn’t mean that they have the skills required to succeed in their roles, and help the company succeed in its transformation as well. So just because someone worked as a product manager in the past, for example, doesn’t necessarily mean that he or she also, you know, has the emerging product management skills needed for the transformation. Moreover, pay was tied to the years of experience, right, you can see that disclaimer at the bottom of every job description that mentions that. So that’s why many transformations, you know, failed to achieve their goals, because companies didn’t have the right talent that have the right skills. But now with the help of, you know, talent intelligence platforms with the help of AI, we can get more granular, right. And as you can see on this page, this is an example from retail, right? We’ve done the same for retail, for banking, for healthcare for telco. Right now, we can dive into that wealth of data and, and extract trends and insights. So, we can infer skills, we can infer likely skills, we can infer skill gaps, right, we can be more precise, prescriptive on the skills we need, which also include emerging skills in benchmark industries for the future business success. It’s not about, hey, for this role, here are the top skills or most common skills. It’s also about looking beyond that. So, if you look at the next page, for example, this is where, you know, we start looking at what are the fastest rising skills, what are the fastest declining skills, that doesn’t mean those skills are not important. It just means that you know, they have diminishing value in the in the marketplace. But, you know, looking at this, what that means is that now we can put $1 sign on the skills that are important to us. And that will help us deliver on transformations and our business objectives successfully. We can adjust the pay on the skills that an individual that an individual has or doesn’t have. And just because you and I have the same title doesn’t mean that you and I, you know necessarily should be this should necessarily be compensated the same way because we might have different skill sets. And we can add different value to those to the companies that we work with. If you don’t mind going into the next page, please, Jason, it’s also important to note, and I mentioned this earlier that not all skills are created equal, right, and not all skills are created equal for the same company. Because, again, you know, some skills are very common. But some skills are very common, but still needed for that company, they’re essential for that company to deliver successfully on their objectives. Some skills are emerging, and they’re important for the future, future proofing, some skills are declining and prevalence and have diminishing value. So having that multi-dimensional view is very, very important. So, companies can now reward those individuals that acquire the skills that they need. This is what we call paid attention strategies. And now individuals can be more aware of the skills that contribute to the success of the business and their career, especially as more and more companies hire for potential due to the limited talent pool in certain, in certain cases, companies can now move to pay for skills over the full lifecycle of an individual’s tenure. And this is where the talent management comes into play. Because not only should that happen at the point of hire, but also to attract, build and retain the right talent. They can develop skills-based rewards linked to strategic goals and incentivize and recognize ongoing development that the individuals are going through. So,

Jason Cerrato 21:46
hey, Shawn, thank you for walking us through these dashboards for how talent insights can drive skills intelligence for your organization compared to your industry. So, we have a little bit of a view into this new lens of visibility for the organization. But as you have these insights, and you now gain this intelligence, I’m going to shift it over to Brian to ask, Well, how do you make sense of this? How do you start to operationalize this? What information combined with this is critical for HR leaders to consider?

Brian Fisher 22:19
Yeah, that’s right. Before you start paying for something or investing in something, you need to know a few things and what he shams has shared. Absolutely critical, right? What skills are business critical? Well, you know, a lot of that a lot of those trends and, and information about what the trends are in the marketplace can help us that also your specific business strategy really impacts which skills are business critical, the demand and the emerging and declining, as he Shem just showed that’s important, too, for sure. In both supply and demand that has been, then that is all really good information to determine how to, or what skills to invest in. The question is now on. The last question is, what are the skills that are not only very important to our success, not only that are important to or, but you also know, are increasing in demand and maybe waning in supply? But what are the skills that are actually driving pay and competence in compensation? So, when we think about the previous slide a couple slides ago, right, when I talked about pay philosophy, being market driven, is typically, you know, is certainly a pillar in almost all compensation philosophies. So how can you ensure those are competitive? Well, the way you can do that now is benchmarking the value of skills. And I’m going to turn it over to Peter, who’s going to share a little bit about some examples from our Mercer Skill Price dataset.

Peter Stevenson 24:08
Yeah, thanks, Brian. So, I think you know, it’s clear from the conversation today, one of the things that’s really changed over the last few years relates to advances in data and in technology. And companies have been asking, you know, what, what skills are driving pay? And what are the values of those skills for some time, now we’re able to help them with tools like Mercer Skills Price. So, price is powered by an algorithm, which models the monetary values of skills. Basically, it sits at what I think of as being the intersection between skills library, which is Mercer skills, taxonomy and our rewards databases, which are, you know, the best in the world. In practice, it works a lot like a traditional market pricing, but one which encompasses skills. So, you search and select the job, and then you get to see the rewards data associated with it. skills associated with it and the values of those skills, as well as relevant scores, market demand data, the trend direction of the market demand for those skills, you can also customize benchmark jobs to contain a unique mix of skills and see how those skills mix impacts upon pay. So that’s pretty cool. So, for example, within the HR job family in the US, which is what you can see a representation of on the screen here, the skills that are driving the most reward value are up on the slide now with competitive intelligence, strategic planning, and persuasive communications coming out on top. And we can also look into a particular job to see which skills are most relevant to the role and how much they’re worth. And you know, you have the cloud architect, for example, on the screen. So, this, this really is changing the game when it comes to talent acquisition, and talent retention, in particular companies are factoring this data into their decision. But it’s also useful input into the development or review of salary ranges or skilled allowances, which factoring skills-based pay differentials. Brian, would you would you say this aligns with what you’re seeing?

Brian Fisher 26:14
Yes, and I think that what is important about this concept of skills intelligence is that some programs require you to understand what is important, what skills are most important, and what skills are driving those value across the full job family across a specific job, or you may have an enterprise plan. That is, to the Shams point outside of the construct of jobs, that’s identifying specific skills that you want to be driving paid for. So that’s an important aspect of this is being able to, to look at skills in the context of different work constructs. Yeah, and so I think with that, let’s, let’s, let’s, let’s take a second and hear back from the audience here. Because while the topic of the day is paid for skills, there’s also an as the Sham is described or alluded to, in his session, in this section, there’s a lot of other use cases for skills. And so, in our global talent trends, our latest global talent Trends Survey, you know, establishing skill-based practices was a top five priority among executives. Now, the quiz or the poll that is popping up is where are you applying skills? Where are you integrating skills across talent acquisition, rewards career pathing? I’ll be interested to see where we are what we see or what we get as the results? Because it really does. It also is associated with the topic or the question early on, which was where to start. And there’s certainly some leading use cases that are fairly common, you know, career development, and oftentimes, talent acquisition, you know, for sure, recruiters have long identified skills that they needed to recruit. Now, were those always informed by really strong skills intelligence? Or, you know, were they more anecdotally developed? Do those skills sit in our in your, you know, in your skill requirements in your requisition? And do they just stay there? Or do they actual though, that same skills, data doesn’t float in all of your other processes. So, it’s interesting as we look at these prioritizations, which looks like currently, skills are being used within career development, which makes a lot of sense. Organizations that are that are moving toward becoming a skills-based organization are starting to say we want we want to progress across not just one but many of these. But we want to do it in an intelligent, organized, well, architected, architected way, such that our data that fuels all of these programs is aligned, normalized, and is consistent in what we mean by each one of these skills across all of these programs. So, Jason, I’m curious, like, Do you have any, any reactions to what you’re seeing based on you know, many of the clients that you work with day in and day out.

Jason Cerrato 29:50
So not surprised to see talent acquisition and career development, kind of leading the field here. And obviously those two things then feed into career pathing What I think is next, and kind of the next part of this discussion would be workforce planning and work design. You know, with talent, intelligence, and with talent transformation, there’s a lot of focus on recruiting and retention and redeployment with things like upskilling. I think as we’ve done some talent insights research over the last couple of years, one of the solutions that’s coming out of that skills analysis is not just recruiting and retention and redeployment. It’s also kind of redesigning and reengineering jobs and roles around the work at hand. So, it’s interesting to see these results and not too surprising based off of kind of how people usually put together a plan of attack, or the areas that may be most prevalent with the most volume or the most comfortable. But I would also say some of these areas that seem to be coming in second door lagging are probably what’s next for 2023 and 2024.

Brian Fisher 31:00
Yeah, no, I would agree. And what’s really interesting is that is that rewards at 20% is certainly a lagging use case. Your comments about reengineering and redesigning of work, or the organizations that are gravitating to paying for skills or who are on the lead leg? There are a there’s a correlation between how you are rethinking the way you work and your talent models, and whether you, you know, the requirement to rethink your pay practices and pay for skill, which, which leads us into, you know, into our, our next topic, which is really about the design of these pay programs. And so, if you wouldn’t mind if you just flip to the next slide, because it really has, there’s a lot on here, but it’s very important to talk about talent models, as we talked about, what pay for skill can do for you, right. So, increasingly, employers are adopting more agile talent models, the pandemic accelerated the transition for some employees for more of a fixed roll into flex or flow environments. And this was you know, in order to more rapidly adjust to the needs of the business and their customers. And so, you can read their fixed employees, you know, primarily or the work that is being asked of them is described on the job description, in a flex you know, it’s more of a hybrid role, where you as a as talent and a group of skills may be asked for a portion of your time to do other work to flow to need to weather those projects gigs, but to flow to those assignments, you know, outside of your fixed role, and then in the flow environment, you are continuously flowing to work based on the skills of the individual. And so, as I talked, you know, the predominant model talent model in the vast majority of employers today is managing talent and fixed roles, but the trend continues to move to the right, one segment, one function, one team at a time in most cases. And what this does is it leaves organizations with varying talent models and Mercer’s point of view if you have varying talent models. It requires varying and segmented rewards models. So, the talent that’s managed predominantly in a fixed in a fixed job model, what makes sense to reward in a job-based model? Now, that doesn’t mean that pay will look the same as it did five years ago. You know, it doesn’t mean that it has to be your traditional nature. On the contrary, employers are leveraging paid for skill elements, such as skill premiums or retention programs within the job structure. Now some are also rethinking segmentation right driving greater differentiation not just in levels or market position, but also in program design and eligibility for pivotal populations. So, there’s plenty to rethink in the fixed role environment. But as you move to the right when talent is managed in Flex or flow models, will traditional job-based pay be no longer fit for purpose. in these environments, the importance of the role decreases, I think he should have said, the relevance of the role, right decreases, as he put it earlier, so that the importance of the job that you sit in, decreases in value. And the value that the incumbent is delivering is more based on their skills, their contribution to projects and gigs, and the utilization of that talent. So, let me give you an example, global insurer transitioned their data science team to a flow talent model, where workers were assigned projects and gigs within an AI driven talent marketplace, much like a talent marketplace that that Eightfold enables, well, in order to fit rewards to this approach, they had to change everything, right. So, from a base pay perspective, they established a broad role in Workday, there are workday user, and they determine a core base pay elements for all of these workers. The same, but then how pay was differentiated with that was based on the skills of the incumbent. And those skill values were determined and reflected in each workers pay. And then pay was further differentiated through Project pay that vary based on the size and criticality of the projects. And in addition, a broader incentive plan was still in play to connect their contribution to the success beyond their assigned projects. So, this was an example of, of, I would say, revolutionary type of pay change. Whereas not all pay for skills needs to be revolutionary. Sometimes they’re evolutionary. And so, Peter, what did we learn from our survey on how participants are paying for skill?

Peter Stevenson 36:53
Yeah, that’s a great question, Brian. So, you know, we know that most companies are using paper skills to let’s say, enhance or augment more traditional job-based approaches. It’s kind of like an overlay to more traditional approaches. And the survey tells us that most companies are doing this today at the point of hire. So, one of the things that we saw in our snapshot survey data is that nearly 30% of companies reported that they informally link rewards to apparent skills for new joiners. And on top of that, we have, you know, just over 10%, who say they do so formally. Now, when I say informally, what this looks like in practice is, you know, probably a recruiter, or a hiring manager making probably assumptions based on anecdotal information, potentially, you know, setting the starting pay the premium level, or even providing a sign on bonus. On top of this, roughly 10% of companies are developing a skill reward linkage of the remainder about a quarter or considering developing some kind of linkage. So, it seems there is a general intent to link pay to skills at time of hire amongst our survey participants. Related to this, you may wonder what companies are doing around pay for skill after point of hire. So, you know, we saw a mixed pattern when asking companies about linking rewards to the ongoing development of skills. And this was a this was a separate question, but about 45% of companies said that they don’t do anything. And the bulk of the remainder said that they did it on an informal basis. So, this diversity of practice suggests that there’s not a single, right way, at least at the moment and no existing standard way or clear best practice, although, my sense is that that will emerge. Brian does, does that align with what you’re saying?

Brian Fisher 38:46
It does, it doesn’t actually be put to the next slide it feeds it feeds this topic, because the right design fits your need in your organization. And so, the two factors that I feel, can determine what plan is right for you, what pay for school plan is right for you is along the x axis, you have basically skills maturity, right? Is your skills intelligence strong? Do people understand what skills are? Do people believe that you can assess skills at the individual level? Right, these are all important, the stronger that skills as maturity are more mature that is, the more impactful your plans could potentially be on the y axis is how disruptive you know, are you willing to be done you want to be, will your organization tolerate if you will, how much change is accepted? And so, as Peter told us, if you look at the boxes now, as Peter told us rewarding for skills at the point of hire is quite popular. So, it’s not surprising the market and form new hire pays on this list. Now the question is where Right, is it being done today with anecdotal data, or with true skills, intelligence, and bolster pay for skills? Right, but I think organizations now the data is available, you know, would be, would benefit from making that based on stronger datasets in the middle. Right, you have companies that customize their existing ranges, right or STI targets, or provide greater flexibility within the ranges within their existing job ranges for critical or high demand skills. This happens again, informally today, at the point of annual increases, I know many organizations say, hey, leader, think about these 12 things. One of those 12 things is often criticality of skill set or even proficiency of that skill. Right. So, more organizations are trying to be a little bit more formulated in that approach. And then retention programs are nothing new about retention programs. But now we’re seeing that equity grants and multi-year cash payments, or instead of being based on the role are actually being based on critical skills, which are pretty cool, but also relatively easy to administer. And as we go to the right and agile environment, as I said, the assignment of worker becomes you to project your gig is based on individual skill sets. In doing so, with the enhanced ability to market price specific skills, project pay, in essence becomes a form of pay for skill, or in the direct skill stipends or differentials. Right, this, this has existed for sure, for many years. Now, with enhanced data, and technology, you’re able to track those skills on individuals in enhanced way, and also measure or ensure you’re competitive with the pay that you’re delivering. And then at the top right, some leading companies are exploring how AI can drive, pay decisions and automate processes. And in doing so, skills can be incorporated into that algorithm. Now, Mercer has published an interview series with IBM, about their pay for skill approach. And this includes an AI model that guides annual increases, after considering the skills criticality and scarcity. So, for pay for skill, there’s not a one size fits all, it’s certainly not a one size fits all proposition. But an effective program can strengthen even more than just the pay for school program, but other skills related programs. And Jason, I might turn it over to you to talk a little bit more about that.

Jason Cerrato 42:39
Yeah, sure. And before I do, I just wanted to ask a question or kind of double click on something you covered earlier, where you just mentioned right now, you know, it may not be a one size fits all, and it has to align to the strategy and align to the work. On one of your early slides, you kind of gave the history of you know, compensation strategies over time. And when you got to the 2020s, you know, everything was at the same priority of all being important and kind of this mixed model approach. I think that speaks to it. It’s based off of setting based off of work based off of audience. And we’re also right now going through a period of experimentation, right. But the other thing was, the next slide that followed was based off of the Mercer study, why are people doing this? And what are they looking to do? And two of the reasons were incentivizing career development, and one of the ones that was in the lower half was increasing transparency. Right. So, when the example you gave about, I believe it was an insurance company, where they were doing this model based off of, you know, skills after a base pay compensation approach. Do you feel that that’s part of that is both incentivizing people to develop certain skills, as well as increasing a way of having more transparent conversations around career development and pay?

Brian Fisher 43:59
Absolutely. And actually, I mentioned that interview with IBM. And I’d love to send out a link to this group. If you actually Google Mercer, IBM pay for skill you’ll land on, on that, on that, that interview series, speaks a lot about transparency, and being comfortable talking about what skills are growing, what skills are critical, and that it really engages and empower the employees. So that would be a good lesson about the power of transparency, for you know, that even a pay for school activity can drive. Perfect.

Jason Cerrato 44:45
And, you know, as we go through the content here, I just wanted to provide two quick examples of how you can start to operationalize this. If you go down a path of using skills, intelligence to kind of redesign work, and re-engineer roles. based off of skills, and then put this into practice. So, this is what this looks like across a talent intelligence platform like Eightfold. But, you know, we have an AI engine that incorporates a piece of functionality that we refer to, you know, internally as je, which stands for our job intelligence engine. But basically, what you can do is you can formulate roles using skills, intelligence and talent insights. And you can start to adjust and, you know, dynamically configure your current roles, as well as start to potentially design roles for the future. And having this done in a talent intelligence platform that allows for you to also start to operationalize this, you know, this strategy starts to surface across the talent lifecycle. So, you can design roles using talent, insights and skills, intelligence, that then gets stored in a role library. So, across the organization, everyone starts from kind of, you know, they’re playing from the same sheet music, so to say, but it also allows that to dynamically update over time, and you’re not referring to a static Job Library that sits in an Excel spreadsheet somewhere and gets outdated very quickly. That’s what we call role calibration, where you can continue to evolve and calibrate the role in real time leveraging AI for the skill-based insights. From there, it can tie into, you know, the employee experience to inform them through career planning capability. So, if I have these skills, and I’m in this role today, where can I take this within this organization, and what are the jobs that are currently posted. But beyond that, what are roles that may or may not be currently available, but I can work towards in the future, as the organization tries to align their talent strategy with their business strategy. From there, you can do things like incorporate skills assessments, and within our platform, we have the ability to do skills assessments within Eightfold, or also incorporate third party skill assessments, whether you’re doing them on the front end for talent acquisition, or as part of, you know, the employee development cycle for talent management. So that’s part of bringing in additional data to the conversation, as well as potentially incorporating skill identification and skill validation. And then from there, this can also feed into succession planning, when it’s done in the same platform. So, for us, you know, we have an offering of succession planning within Eightfold. And it’s not your traditional succession planning, where you’re looking at kind of the C suite minus two or the top 200. This is something where you’re applying this skill-based evaluation for the entire organization. And what it really amounts to is looking at your talent in a process that becomes skill-based role readiness, and what is my bench for these roles? What people are ready, what people have adjacent skills that could eventually become ready? And how do I start to build this out, breaking down the responsibilities and requirements of a role through a skills-based lens. And one of the nice things that I like about doing it in a consolidated platform like gatefold is that you have TA and TM. And for some customers, they’re doing what we call talent flex, which is contingent workers in the same platform. And as you’re putting together this strategy, not only are you identifying skills and skill, criticality and Rarity, you’re also investing in the right talent, investing in the right skills, and your talent management processes become informed about your talent acquisition data, and the skills intelligence. So, for example, we have some customers that we’re working with, that are using this to incorporate, you know, build, buy, borrow strategies, but as part of that, they’re trying to figure out what are the skills that we want to invest in, in the future that we want to invest in for the future that really align to the IP that drives our business? And separate from that, what are the skills that we may need today, just to help us get along to reach that future goal? Well, we may want to borrow those skills and maybe handle them through contractors or contingent workers or have them done through a project rather than a roll just gives you the ability to take that skill intelligence and operationalize it. And then as you’re putting this into play, you can start to go through again, Rarity, criticality, you know, the key investments to then align that with a rewards program that incentivizes and aligns with that type of strategy. From there, it’s quite bright. Yeah, I

Brian Fisher 49:40
was getting I was getting a comment there. Jason, that that would I think about that. Is one of what I what I hear a lot is Brian, great. I’m doing this for a team or a department. How do I do skills at scale? That example you just showed really, you know, bro brings it to life that, that you’re able to apply skills through multiple processes and do it at scale with technology, which leads us technology happens to be one of the answers on this on this survey. So, this is the last look, as we close, we’ll just take a look back at one more question from the survey, asking what are the major barriers to increasing pay for skill? I’m hopeful that this discussion today makes some of these challenges more manageable, right. So, themes here we see too complex or too big of a change. Well, as discussed, taking baby steps can help here, adding, you know pay for skill elements, especially on the left side of that continuum that we showed earlier, can be much more, as I said, more evolutionary than revolutionary. The other themes we see difficult to manage, you know, we don’t have the right technology or can’t generate the insights Well, lean into technology now, right? Let the AI based tools do a lot of the heavy work, right products today are making skill-based practices, including pay for skill, more pot that make it impossible for HR teams of all shapes and sizes that just a few years ago might look at and say that’s too much of a Herculean effort. Now to manage skills at the worker profile level, using AI inferences is a whole lot simple. It doesn’t absolutely solve it right; you still need some engagement with associates for some use cases. But it takes it takes a number of calories and fractionalize it very quickly. So, at the end of the day, the three topics that we discussed, right on the right. They also represent three simple steps, right, establish a business case, whether that’s at the department, team, or enterprise level. But before you do anything with that, with that business case, make sure you have the skills, intelligence, what skills, how much we pay for those skills, you need to have that. And then design the right approach. It’s fit for purpose for you, which might be somewhere across that spectrum that we discussed, does not have to be revolutionary can be evolutionary. But find what works for you. Trial, you’re adopted, tested, learn kind of mentality, apply it, pilot it, expand it and grow. I think at that at this point, I think I’ve gone through this, I think we’re going to open up for questions. Is that right, Jason?

Jason Cerrato 52:35
Yeah. So, gentlemen, our audience has been actively submitting some questions through the chat. So, we’ll try to get to a couple of them. I’ll throw this one out. This one comes from Dave, how are skills being defined, validated, and normalized as a unit of measure? You know, is the skills economy built on a solid data Foundation?

Brian Fisher 52:59
I was actually going to say that there’s a in a you a theoretical answer to that. And then there’s the true data science of it. And this Sham, I think that’s probably the more interesting piece of it.

Hicham Zahr 53:13
Right? And this is where AI comes into help, right? This is where when you’re looking at, you know, in the case of if Eightfold one, one plus billion data points, right, that’s where, you know, you can do this at scale. And that’s where you can, you know, define and normalize those skills right. Now. No, of course, you know, and you mentioned this, Brian, when you look at this problem, when we look at it, it sounds it looks really big. But what can you do today? What step? What’s one step you can do today, for you to move closer to your goal to building a skills-based organization? And that entails getting an understanding of what skills do you currently have at your company? What skills you know, are emerging in the industry, and what skills the best in class or benchmark companies have for you to do that. This is where you need, you know, Italian intelligence platform and AI based talent intelligence platform to help you with those. And then, you know, based on that you can come and say, Okay, this is what I need for my own company. And that’s where, you know, you can you can derive those skills that are important to you. And that’s how you can normalize it across your organization. Perfect.

Jason Cerrato 54:30
Jennifer asked the question, she says, How do companies incorporate a pay for skills program while still recognizing individual performance? Or are these pay strategies unable to be combined?

Brian Fisher 54:40
Oh, I love it. I love this I view I’ve had presentations where the title was busting MythBusters right, busting the myths of pay for skill. Pay for skill does not replace pay for performance. It’s a matter of what pay elements are you using for What objectives so it goes back to the PE philosophy you need to have it needs to drive performance, it also needs to promote skills, what PE elements do you use, and sometimes PE elements can serve two purposes. But you got to be really smart about that. And you don’t dilute the value of, of a PE element for that purpose. So, they work together. They’re not they’re not separate or discrete.

Hicham Zahr 55:23
I love what you’re saying, right? Because imagine you have the right skills, but you’re not using them. Right. So, then what’s, what’s the point? So yeah, sorry. Go ahead, Jason.

Jason Cerrato 55:31
Trying to fit in one more. One more question. Deb asks, many moons ago, there were skill-based pain evaluation systems, can this possibly be a resurrection of that using today’s talent, intelligence, some of these capabilities were not available back then.

Brian Fisher 55:48
I can take that. Yes. So, one is most of the pay for school activity that we’re seeing is in a technical talent, and knowledge worker populations. So that is the traditional skill base pay environments that I think is being alluded to. So, one is with technology with AI inferences. And also, with this redesign of work there and more agile environments, that’s starting to that’s creating the business need to pay for skill in a different way for that knowledge worker. At the same time, technology is actually helping that lets the operations environments that may be a 9090, sunset, their skill base pay program, because it was paying for flexibility, but they couldn’t maximize productivity. Now with technology, the ability to track even as simple as worker time on different machines and things of that sort, there’s new ways to think about workforce planning, that ensures that you’re resolving both for flexibility, and also productivity and utilization. It doesn’t have to be one or the other.

Jason Cerrato 56:57
Perfect. And with that, I’d like to thank everyone who attended the session today and for all the questions that were submitted. If we didn’t get to your question, we apologize, and we’ll try to follow up with you after the fact. With that, I’d like to hand it back over to Dr. Atkins.

Speaker 5 57:10
What a robust and enlightening discussion. Just a reminder to HCI members. Today’s webcast has been approved for HR CI and Sherm credit as well as for HCI recertification. Your credits for attending this webcast will show on your My HCI profile under the transcript tab. While you’re there, don’t forget to check out hci.org for even more insights, as well as information on our certifications, virtual conferences, premium membership and more. And I’d like to say one more. Thank you for our awesome presentation presenters today and the good people at eighth board and Mercer. Also, I’d like to thank you our webcast viewers, thank you for spending an hour with core to seeing you next time.

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