Why Would I consider Skills-based Talent Strategies? (Part 2)

This is the second blog examining the reasons why many companies are pursuing an interest in skills-based talent strategies. If you haven’t read part 1, you can read that here. This blog focuses on which companies and industries are most interested in skills-based talent solutions, and what business cases are driving that interest.

I heard that skills-based talent was only relevant to technology and professional services firms?

While it certainly is top of mind for our clients in technology centric and professional service industries, we have just as many clients in other service industries (e.g., healthcare, financial services), products and heavy industry asking us about skills-based talent management. Labor shortages in STEM professions affect a wide swath of industries, not just computer/technology/telecommunications firms. Accounting/finance, energy and resources, mining, transportation, aerospace & defense, manufacturing, and healthcare are all seeing historic shortages in talent. Even those sectors which are not directly reliant on technology or engineering to the same degree are impacted by the general shift to an information age. Consider how retail, hospitality, food service and even entertainment have been completely redefined by eCommerce and social media. And all that is before the most recent advances in artificial intelligence.

Ok, but isn’t this just a play by Talent professionals and technology vendors to make themselves more relevant?

There is a lot of hype about skills these days. Such is the typical cycle with any new business solution. Some will be early adopters, and others will wait and see. Having spent the last several years working with clients on skill-based talent strategies across various industries, there have been a wide variety of reasons why clients sought us out. But in truth we have spent as much time talking with front-end, client-facing and operational executives about their business capability challenges as we have talent executives discussing their talent management challenges. Below we have collected some of the business challenges and use cases we have encountered talking with our clients over the past several years about skills.

 

Business-Driven Use Cases for Skills-based Talent

 

Revenue-Driven

Long-Term Business Growth: A company wishes to invest in a future business area that relies on the company developing new technical or engineering capabilities. This might be driven by new product designs, decarbonization of supply chains, or entre into new markets across any number of industries.

Expansion/Growth of Current Operations: A company with a successful product or service desires to grow dramatically. To do so, it needs to replicate the skill set only a few currently possess and existing talent development methods are believed to be inadequate to the scale and timeframe required.

 

Revenue/Operations-Driven

Business Agility in the Face of Constant/Accelerating Change: IT Departments, R&D departments, technology and telecommunications firms, and other areas of the business that are subject to frequent and dramatic business change need to make upskilling and reskilling a constant business process to keep pace with the accelerating pace of change in their market.

Resource Management Efficiency – A project-based company like a professional service, construction, or technology firm believes that using a talent marketplace will more efficiently allocate resources to project needs, dramatically improving the utilization (chargeability) of its resources. For products firms this may be an operational savings, but for many service firms this would drive top line growth.

 

Operations/Expense-Driven

Driving Efficiency into Existing Operations (New Service Delivery Models): A company wishes to improve efficiency in current operations through a combination of automation, centralization, offshoring, and standardization in order to keep costs competitive. This often requires dramatic changes to workforce models and the job architecture as processes and job responsibilities are redesigned.

Driving Efficiency into Existing Operations (The Redesign of Work Due to AI): As the latest wave of AI tools and large language models are adopted, many knowledge worker jobs will undergo a radical redesign. New skills will be needed, and old skills abandoned as new ways of working arise.

Driving Efficiency into Existing Operations (The redesign of work due to Data Analytics): Similar to the example above, the digitalization of formerly analog or manual work processes produces data that workers need to analyze, process, and summarize. This is a new task for many workers and requires upskilling not just limited to IT personnel, but across every job grade and department.

Improving the Energy Efficiency of Existing Operations (ESG Examples): Many companies are replacing their existing work practices with new ones that are more energy efficient or reduce their carbon footprint. This can have massive supply chain implications as processes are decarbonized, fleets are electrified, power suppliers renegotiated, building and facilities contracts renegotiated, product suppliers reevaluated, etc. Many new green skills and capabilities will be needed by all, just as old ones become less relevant.

 

Asset/Resource Management-driven

Business Downturn/Disruption/Cycles: The company is subject to periodic upswings and downswings in business demand, which historically have been managed with either hiring and layoff cycles or expensive short-term contracting. As an alternative, the company is considering using a Talent marketplace to reallocate and reskill internal resources more efficiently to areas of grater demand. This can reduce the drain on institutional knowledge, the cost of replacing and onboarding inexperienced staff, and improve employee morale and trust.

Capital Asset Efficiency – Industrial Products and heavy industry companies have billions of dollars tied up in significant capital equipment investments on which their operations depend. In many companies, this equipment is aging. It requires ongoing maintenance at a time when the mainstay of the technical workforce is retiring and when it is more challenging than ever before to attract young skilled workers to maintain the aging equipment. Scarce talent must be identified, attracted, sourced, upskilled, shared, and stretched across the organization as nimbly as possible.

 

Talent-Driven Use Cases for Skills-based Talent

 

Organizational Design-driven

Adaptable Talent Structures: Many large, matrixed, or heavily siloed organizations (like conglomerates, technology, and professional service firms) can hardly keep pace with the constant churn of interdisciplinary trends and emerging technology. They need more adaptable organizational structures that allow talent to flow freely and cross-functionally throughout the organization.

Talent Scarcity Driving Remote or Centralized Work: With talent shortages in many industries and fields, some companies are pooling scarce resources in centralized organizations to more equitably and judiciously allocate and prioritize resources when and where they are needed most. Others are allowing them to work remotely in order to attract or retain them.

 

Career Management/Mobility-driven

Mobility and Self-directed careers: Some companies with significant turnover problems seek to reduce attrition and improve the employee experience by improving career mobility through talent marketplaces and skill-based career pathways. By allowing employees to transparently see the skill gaps between themselves and their desired career direction, they can pursue highly personalized developmental pathways with talent development, mentors and developmental assignment tied to their skill gaps and interests.

Advancement through Opportunity Marketplaces: Some consumer and industrial product companies with larger populations of employees with traditionally limited career advancement and higher turnover are experimenting with internal opportunity marketplaces to create opportunities for firsthand experience, advancement, and lateral movement through short-term internal assignments (gigs), skill-based mentor matching, and targeted learning pathways.

 

Talent Acquisition-driven

Talent Scarcity Opening Recruiting to Non-Traditional Talent Pools. As STEM professions experience historic talent shortages in labor markets, many firms are abandoning traditional college degree hiring requirements. They are reaching out to non-traditional talent pools if they can demonstrate that they can perform the skill or have the potential to learn the skill. This opens recruiting channels to much larger pools and allows greater diversity through access to historically underrepresented groups.

Talent Scarcity Driving Job Redesign: Other companies are responding to historic STEM shortages with work redesign. Many professions (e.g., healthcare) have been forced to redesign historic work practices to push down work tasks formerly done by more senior professionals to more junior technicians, leaving only those essential tasks for the scarce senior resources.

 

Workforce Planning-driven

Predicting Future Needs: As companies look to their futures, many worry about their future business capability. They try to predict the technological and industry trends they will need to stay competitive. Their future business capability needs to anticipate critical skill gaps with enough time to implement mitigation strategies and close them in advance.

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