What is Skills-based Talent (Part 3)

This is the third blog in the skills-based talent series. It focuses on the definition(s) of skills-based talent strategies and examines their elements and uses. Check out Part 1 and Part 2 for more insights.

What is a ‘Skills-based Organization’?

“Skills-based organization” is not our favorite expression. A more fitting term would be skills-based or skills-centered talent strategies. This is because Skills-based Talent is not just a single strategy but a collection of talent strategies that all revolve around a common theme. They all prioritize skills as a central organizing feature, aiming to maximize the adaptability of talent in an environment where skills are both scarce and rapidly changing. The essential advantage of this approach is that skills data is shared between talent processes, giving the entire enterprise a comprehensive understanding of its skill set and how to best attract, retain, develop, and deploy them throughout the enterprise for maximum advantage.

So, what are these various skills-based talent strategies?

Skills-based Learning & Development (L&D) is a talent strategy focusing on a more bite-sized, on-demand, in-the-flow-of-work approach for learning assets. Skill-based training may already exist in your organization. You often see it with IT content or very discrete on-the-job tasks. It often has a how-to feel (think YouTube video). In recent years, we have witnessed skill-based training organized into learning pathways using Learning Experience Platforms (LXPs) systems.

In a skills-based organization context, it might be used for ‘upskilling.’ The classic example would involve seeking to fill an open role and finding no perfect matches. Instead, you find someone who is a ‘close’ or ‘partial’ match and then close the gaps with skills-based upskilling. For example, you might look for a programmer in an application similar to the one you need and then teach them your application via targeted upskilling.

Skills-based Resource Management (RM) often centers on Talent Marketplaces – a kind of internal jobs board for job tasks, short assignments, or projects. Employees can sign up for tasks like picking up a fare on Uber or DoorDash. These ‘gigs’ can be mission-critical work tasks or more ‘volunteer’ internal assignments designed as a learning experience. It can be more centrally controlled/driven or more of an open market. Its focus on assigning work at the more granular task level makes it more flexible in stretching skills across the organization (i.e., smaller rocks fill more holes). Admittedly, the work must be organized to be ‘gig friendly.’ Project work, for example, usually is. Factory work takes more effort to make gig-friendly, and that is where we get into skills-based work design.

Skills-based Assessment or Credentialing deals with how to capture the skills of your employees objectively and equitably. It arises as a need for skills-based resourcing and an output of skills-based L&D or acquisition. It answers, “How do I know this person actually has the skill they say they do?” It deals with developing methods to validate the skills people have through observation, demonstration, simulation, or completing some test. When the skill is achieved, the person gets a ‘badge’ or ‘credential.’ Hazardous tasks, regulated industries, licensed professions, and differing international standards can all complicate the effort.

Skills-based Leadership Development deals with building leadership skills within people. It relates to broader Leadership Development efforts, like succession planning, leadership competencies, mentoring, apprenticeship, and high-potential development programs, but it is focused on the skill-building component. Your company probably has some ‘leadership’ or ‘management’ training courses for new and emerging supervisors and managers today. The skills-based version democratizes the process by posting the skills necessary for leadership advancement, comparing the skills in your profile to the ones needed for advancement, recommending ala cart learning options to close gaps, and recording your new skills and even ‘readiness’ for promotion. Recommendations may include training modules, gig assignments, mentors, external certifications, or more.

Skills-based Organization Design deals with how skills are physically housed within the organizational structures and how those structures enhance or impede the flow of skills throughout the organization. Does your org design tie up certain skills in organizational silos? Are certain scarce skills centralized in COEs or SSCs so they can be allocated more efficiently? Does your org design create a dead end for certain skills development (like when advancement involves abandoning your technical skills for management positions?)

Skills-based Work Design involves designing work around the skills people possess—the availability and quality of skills available rather than creating work processes for scale. For example, it transfers less complex and more frequent tasks to assistants or technicians, leaving only the essential functions to scarce Experts. Another example is AI. Many companies are now experimenting with new ways of working that intend to leave the things that humans do best to humans and the things AI does best to computers (a process sometimes called human-centered work design).

Skills-based Career Management deals with how skills are mapped to jobs and career paths and how employees are empowered to navigate their careers by understanding and actively pursuing transparently published skill credentials for job eligibility. It surrounds the job or career architecture. The primary distinction of skills-based career management is how it can open career mobility to employees. For example:

  1. An employee can look up the skills gaps between himself and any position in the company, thus more transparently supporting lateral career movement.
  2. A company might support multiple career paths, offering advancement through Management, more technical expertise, well-rounded experience, or continuous innovation.
  3. If an employee used his self-directed learning interests to develop a unique portfolio of skills spanning several job areas – in which, what group would he belong? Who would mentor him? What career choices would be open to him?

Skills-based career management is linked with issues of employee experience and retention.

Skills-based Compensation deals with compensation systems that reward people more directly for the skills they develop. It could include skill-based pay scales, skills-based bonuses, skills-based benefits, or incentives. Contractors and gig workers often get paid by the task or project, with more advanced roles/skills getting a higher pay rate. This could work for internal gig marketplace tasks as well. It also presumes someone is doing their homework to determine the market value of various skills related to others.

Skills-based Recruiting is a talent acquisition strategy focusing less on formal degrees and bespoke experiences and more on what a candidate can do. As such, recruiters are not searching for job hires as much as skills hires. The search process is focused on the skills people possess or have the potential to acquire. It is often fueled by the realization that certain skills (usually STEM skills) are in such high demand or low supply that traditional recruiting approaches and talent pools will no longer be sufficient. Many companies, for example, have started dropping college degree requirements for jobs where talent is scarce, and licensing does not require a degree. Skills-based talent acquisition also often involves strategic sourcing strategies, i.e., how critical skills will be bought vs. built, borrowed, bot, or based elsewhere.

Skills-based Workforce Planning seeks to anticipate strategic skills shortages in the future and create mitigation strategies to address them proactively. It draws upon labor market intelligence and business demand projections to translate future business capabilities needs into the critical skills gap it will need and in what numbers. This process is often done today, but usually regarding headcount rather than skills.

What Skills-based Talent Management is not.

It is important to remember that skills-based talent strategies are about more than just L&D. It is easy to confuse Skills-based Talent with L&D because the word skill is in the name, but remember that Skills-based Talent is ultimately about an adaptable Talent model. Skills-based Talent Management is not:

  • just tagging your learning programs with skills.
  • just implementing Workday and turning on the skills feature.
  • just implementing a talent marketplace.
  • just removing degree requirements from job posting.

Skills-based talent management is about linking all essential talent functions (L&D, resource management, performance management, organization design, career and job architecture, recruiting, workforce planning, etc.) with information that provides insight into the capability of your workforce (beyond just headcount) – and proactively managing it.

So, what changes will my organization have to make to become a skills-based organization?

Some people have expressed concern over such a broad set of organizational changes and whether so much change is necessary or survivable. No one said you have to move every part of your organization to level 5 across every dimension of the maturity model. And certainly, no one said you have to do it against the will of managers or employees. Taken together, all these strategies could comprise a “skills-based organization.” However, not all organizations will get there, nor do they need to. Other companies will use skills-based talent strategies only for specific critical business units, divisions, or product lines; however, if you want your talent systems to communicate skills data across the talent value chain. If you want L&D skills data to update employee skill profiles and inform Resource Management decisions, workforce planning analyses, or organizational career ladders – you are going to need a common skills language and database to communicate across the organization. Most organizations lack this, and many are realizing they need it to address the critical skill gaps and rapid changes they face.

For more on this last question, stay tuned for our upcoming blog Where Do We Start?

About The Author:

Craig Friedman has been a Human Capital and Talent advisor, executive, and entrepreneur for over 30 years. He is currently a Senior Talent Strategist with the St. Charles Consulting Group. He was formerly a Talent Development leader at Deloitte for nine years. Before that, he was a Human Capital Consultant at Deloitte Consulting for six years and a Human Performance consultant at Accenture for eight years. Craig led the development of two eLearning startups in the early 2000s and has served on the board of advisors for several learning-related non-profits. Craig holds an M.A. from Northwestern University’s School of Education & Social Policy and a BA/BS from Tufts University. Write to Craig at cfriedman@stccg.com. ©2024