Implications of a Skills-Based Talent Strategy on Adaptable Organization Design

This is the seventh in a ten-part series on Skills-based talent.

Today’s blog discusses the implications and challenges of implementing a skills-based talent strategy on job and organizational design structures.

Skills-based Work Design

Skills-based organizations aim to create more flexible workforce models to support how resources are aligned to work. This often begins with the way work itself is designed. Rather than work being designed into standard departmental processes intended to deliver consistency at large scale, work is decomposed into projects or tasks that change with the business need, assigning workers with relevant skills to the work as needed. Some companies take this concept across organizational boundaries, temporarily or partially loaning workers through cross-company talent marketplaces. In this way, workers can pursue more mobile career paths, rotating through projects across organizational boundaries.

Other organizations are experimenting with partial exchanges, letting workers spend part of their time outside their traditional job responsibilities to volunteer on internal development initiatives where they can develop new skills and business relationships. For many organizations, the opportunity to tackle such business-critical challenges on cross-functional project teams was only available to select “high potentials.”

Still, other organizations are broadening work design to allow workers with deep specialization to join cross-functional, outcome-based project teams. A simple example would be healthcare organizations that create holistic care teams focused on treating specific medical conditions with a cross-functional team of specialists on assignment from their typical job. In this way, the care team follows the patient rather than the patient being referred through multiple departments.

Skill-based Organization Design

As the emphasis shifts from fixed roles and job titles to individuals’ skills assigned on changing projects, employees develop their own specific portfolios of skills and experience over time. This can put pressure on the existing organizational design structures.

In traditional structures, employees are typically dedicated to a specific department or function. In contrast, skills-based organizations allocate resources more dynamically. Employees are deployed to projects or tasks based on the specific skills required, regardless of their job description.

Employees often join cross-functional teams, assembled to tackle specific projects or tasks and disband or reconfigure as needed. Matrix structures are also common – with employees reporting to both a functional manager (based on their skill area) and a project or team manager (based on their current assignment). Some companies may leverage multiple employment models, even on a single project, sourcing project resources through internal talent marketplaces, freelancers, and gig workers.

With a skills-based strategy, leaders shift from managing employees in their department to dynamically managing work more like project managers – owning business outcomes rather than headcount and sharing talent across organizational boundaries rather than hoarding it for their own team.

When traditional job descriptions and fixed reporting relationships are no longer the organizational norm, people’s job experiences may vary dramatically from person to person. Companies may need to think of creative ways of organizing these more varied career paths, balancing specialists with narrowly focused careers, journeymen rotating through the organization, gig workers performing tasks through a talent marketplace, and leaders seeking paths of greater scope of responsibility.

Implications

  • Decision-Making Authority: decision-making authority may be decentralized, allowing those with relevant expertise to make decisions within their areas of competency. Alternatively, it may be managed through talent marketplaces matching projects to skills via AI algorithms.
  • Balancing worker choice with organizational needs – When work is unbound from jobs, and workers are given more choice in picking assignments, what happens if what workers want no longer aligns with the work organizations need? Will employees worry that once their skills are captured in a database, they may be assigned tasks without their agreement? If a worker volunteers for an internal assignment in addition to their “day job,” how will this type of work be formally evaluated, recognized, or rewarded? Will some workers prefer to be tied to a specific job? Will some regulated industries or careers require it?
  • Balancing efficiency and equity – Organizations need to be thoughtful that work assignments aren’t perceived as biased, overly opaque, or mechanistic in a way that raises concerns of equity or over-commoditizing career choices. Such a large culture shift will require considered effort to manage.
  • Strategic Data-Driven Insights: Organization design is informed by data analytics and insights, identifying skill gaps, workforce trends, and talent needs for effective decision-making. The organization’s design aligns with the business strategy, prioritizing the right skills to achieve strategic objectives.

Challenges

Designing organizational structures to fit a skills-based talent strategy can offer some unique challenges.

  • Skills Validation: Each organization must define its own skills language and clear definition of skills. The absence of reliable skills taxonomy poses challenges. Obtaining robust data to articulate existing skills, proficiency levels, and a solid skills baseline can be challenging. Key tasks include developing agile work definitions, verifiable skill sources, and leveling skills data. Some parts of a business, especially regulated functions, may face more limitations than other areas.
  • Skills Standards & Scale: Skills can be subjective and difficult to standardize across industries and roles. Establishing a consistent skill framework that aligns with the organization’s goals may be challenging, particularly in diverse industries. Implementing a skills-based approach in large organizations with diverse departments and functions can be complex. The model needs to be scalable and adaptable to suit various units within the organization.
  • Skill-Based Silos/Balance: A strong focus on individual skills may inadvertently create silos within the organization, where employees become narrowly specialized and have limited exposure to other areas. Market forces can drive an overabundance of certain skills and a scarcity of others.
  • Implementing the Right Technology: Some companies have experienced failures when implementing technology in certain areas. Iterative evaluation and testing are crucial. Maintenance and ongoing investment will also be necessary.
  • Data Privacy and Security: Gathering and analyzing data on employees’ skills may raise data privacy and security concerns. As AI systems collect more and more data on workers’ skills, experiences, traits, and attributes, care must be taken to adhere to ethical practices and ensure that employee data is protected. To maintain trust, organizations must provide transparency in collecting employee data and recommending assignments and equitable development opportunities, including monitoring AI for bias.

Stay tuned for our next blog on the Implications of a Skills-based Talent Strategy – on Compensation, Rewards, and Leadership Development.

Webinar Recording Registration: Skills-First Talent Strategies

Outlook and Trends Impacting Learning & Development

On today’s episode, we look at Part 2 of the current business landscape for L&D, what are the trends that are driving change, and what are the implications on Learning within organizations.