A strategic case for abandoning a work-based mindset
In a competitive market, attracting and retaining the best talent is the only way for companies to grow. You need the right people at the right time, and you need to pivot as the market changes.
Unfortunately, many leaders think about this issue the wrong way. They are stuck thinking in terms of a fixed set of duties and responsibilities and how to hire them, rather than focusing on the skills needed to be acquired and developed internally. In short, they think about the job, not the skill.
Let’s start with the questions that keep many CEOs up at night.
ebook
The Skills-First Company: A Leader’s Guide to Developing a Lasting Talent
Learn expert strategies to transform your organization into a skills-first company without accelerating hiring.
For 75% of CEOs, skills are the biggest bottleneck to growth
We recently spoke with Neobrain CEO Paul Courtaud about the challenges and opportunities associated with moving to a skills-based operating model. He says that when he asks CEOs what’s stopping them from growing their companies to the next level, they always get the same answer: It’s either taking too long to find the right talent, or the talent simply isn’t in the market. This is a big problem and a difficult problem to solve.
For example, consider the major advances taking place in green hydrogen. With so many countries and regions transitioning towards sustainable energy, energy companies need a stable and reliable workforce of skilled hydrogen engineers. Unfortunately, there is a total lack of such engineers in the market.
You can throw in all the money and perks you want, but it won’t solve this fundamental problem. When valuable skills and experience are in short supply, organizations need a whole new way of thinking about resource allocation and a whole new way of empowering skilled talent.
That’s why major companies are starting to think differently about talent.
How major companies are changing the way they think about human resources
Traditional notions of how companies hire and retain talent are currently inadequate. Rather than setting annual skills roadmaps and hiring accordingly, organizations need to quickly and dynamically reallocate and optimize available skills and resources in response to market signals.
Deloitte explores this trend toward skills-based organizations in a 2022 article, highlighting how leading companies are applying skills-based models to meet demands for increased agility, ownership, and equity in the workplace.
The article states: “Restricting work to standardized tasks performed in functional roles and basing all decisions about employees on their job within the organizational hierarchy impedes some of today’s most important organizational goals, including agility, growth, innovation, diversity, inclusion, equity, and the ability to provide a positive work experience for employees.”
Emphasis on skills, not jobs, as the key component of talent
To address this limitation, leading companies are now moving to new operating models that emphasize skills, rather than jobs, as the key component of employee talent. “We are starting to think of each role at Unilever as a collection of skills, rather than just a title,” says Anish Singh, Unilever’s head of human resources for Australia and New Zealand.
Leaders are showing great interest in skills-based operating models. 81% of executives surveyed by Deloitte preferred either a segmented work model, where employees are directed toward projects based on their skills and interests (60% of respondents), or a broad work model, where employees’ roles are built around desired outcomes (21% of respondents). Only 19% prefer a traditional job-based operating model.
This model also allows people to apply their skills more fluidly to projects and tasks across the organization, rather than being confined to a single responsibility. Additionally, 55% of employees say they have already changed or are likely to change their employment model over the course of their career (e.g. moving from project to project through an internal talent marketplace). This kind of flexibility is a huge benefit to even the most talented employees.
So how can we make this change happen?
A 6-step blueprint for moving from work to skill.
Transitioning from a traditional job-based operating model to a skills-based model may sound difficult, but it can be boiled down to six key steps.
1. Conduct a skills self-assessment
Start by performing a self-assessment of existing skills within your organization. This involves two steps:
Setting up an AI-powered skills ontology. AI tools can quickly generate a list of dynamically enriched skills for each job in your organization. Once you curate with these AI tools, you can validate this with your HR advisors, managers, and leaders. Assess your employees on these skills. This skills ontology allows you to evaluate your team through self-assessment, manager assessment, peer-based assessment, or external third-party testing. This will give you an idea of the proficiency of each skill and each team member’s level of interest in further developing these skills.
A detailed understanding of the current situation will help you understand where your talent wants to go next.
2. Inform each employee of possible next steps
Based on the skills profile you created in step 1, you can build an opportunity marketplace to drive internal opportunities for different roles based on your company’s priorities.
Providing this level of visibility gives employees the opportunity to project themselves into new opportunities within your organization, rather than heading to LinkedIn to look for potential new roles.
3. Align your learning strategies to these goals
Once you understand your employees’ advancement goals and the skills needed to support them in achieving those goals, you can focus on the right learning experiences. Here’s how to achieve this:
First, tag your content to indicate the skills you want to develop. Next, identify skill gaps at the employee level. This can include gaps in your current role (i.e., what skills do you need to improve to perform better today) or your desired next role (i.e., what skills are missing in your next role)? That way, you can make sure you have the right content to help fill in these gaps. Then, when content is missing, we identify subject matter experts based on their skill profiles so we can create the right learning experiences to fill those gaps. Once your content is live, use AI-powered learning recommendations to ensure your employees get the right recommendations to close skill gaps. Finally, measure the impact of these learning experiences in closing skills gaps and increasing flexibility and adaptability.
Next is performance management.
4. Move to skills-based performance management
This focus on skills must then be reflected within the performance management process. Managers and coaches need to continually discuss skills with their teams, and skill development should be a central focus during performance reviews.
Incorporating this focus into performance management provides managers and coaches with valuable new ways to identify aspirations within their teams and develop new skills or apply existing skills to create space for people to achieve these aspirations.
5. Shift to skill-based rather than experience-based hiring
Alongside skill-based performance management, a more fundamental change is the move to skill-based rather than experience-based hiring. This involves defining the role you are recruiting for primarily in terms of the skills your organization needs, rather than the experience you expect from the candidate.
A skills-based hiring process focuses on evaluating candidates based on the capabilities they can bring to the organization, rather than their educational background or past work experience.
6. Incorporate skills focus into strategic workforce planning
To complete each of these six steps, strategic workforce planning must reflect a focus on skills. For large manufacturing organizations, this may also include significant changes to core production processes.
Using the detailed skills information gathered through steps 1-5, HR teams can better align business and talent strategies. This means having a clearer picture of the skill profile of your current workforce and the specific steps they need to complete to reach your goal stage.
For example, how can organizations not only hire externally but also redeploy existing employees through upskilling and reskilling? And how can this redeployment be managed for specific initiatives?
Let’s take a look at this strategic workforce planning example in action. Global technology and engineering company Bosch faced the prospect of up to 1,400 job cuts due to the market’s shift away from diesel technology. However, by moving to a skills-based operating model, the company was able to retain 800 of these roles by entering into a subcontracting relationship with Airbus and applying its engineering skills to a variety of projects.
A final thing to remember is that moving from a job-based operating model to a skills-based operating model can take time. This switch can take months, if not years, to make because the traditional mindset of focusing on specific roles is firmly embedded in how we attract, engage, and retain talent. Additionally, in certain roles and industries, making this pivot too quickly can put you at risk of turnover.
Flexibility, resilience and agility: why moving to skills matters
The COVID-19 pandemic has enabled companies to respond faster and more agilely to market signals around skills. Every organization now has the opportunity to build on this change and permanently move towards an operating model that is based on skills rather than jobs.
As Deloitte points out, skills-based operating models have the potential to increase agility, ownership, and equity in the workplace. Instead of thinking about hiring to fit people into a fixed set of jobs, you can improve organizational performance and hire key talent by thinking about a set of skills that can be fluidly applied to advance priority projects.
This transformation will not happen overnight. After all, we are unraveling decades, if not centuries, of conventional wisdom. But if you get it right, it can transform the way your organization responds to market opportunities and threats. Hire our most talented people to develop and share new skills. and redefining what work means to the good.
To determine what kind of organization you actually want to build and what strategies you need to implement to build it, get The Skills-First Enterprise: A Leader’s Guide To Building Talent That Lasts.
Share with
