Everyone's Talking about Skills-based Organizations

Sculpted around skills.

There’s no harm in summarizing what we mean by skills-based organizations for the purposes of this article.

Under the standard, legacy structure, work is organized by roles in a functional hierarchy with a clear scope, remit, and accountabilities. A skills-based approach dismantles this and packages work around the skills needed, opening up opportunities for professionals to transcend the organizational silos of roles and tasks. Work is broken into meaningful chunks and employees with the relevant skills and capabilities are used to fulfil it in a fluid and agile way.

People feel empowered to unlock their potential, helping organizations grow the skills they need to stay competitive.

But moving to a skills-based requires seismic change. And while some businesses have begun to introduce elements of this model into their day-to-day processes (either in defining skills ontologies or within distinct talent practices, such as workforce planning, or performance management and learning and development) this approach is far from widespread. 

Ultimately, the journey towards building a skills-based organization will need pilots like these in certain business functions before such a significant business-wide change can be achieved.

The case for change.

Organizations that have taken steps towards being skills-based are reporting positive outcomes. According to Deloitte organizations are:

Here are some of the reasons businesses are seeing benefits:

1.   Increased match between talent and business needs. Selecting workers based on skills rather than prior job experience and education has helped organizations better ensure that they have the right talent to meet their business needs – not just for “right now”, but for the future, too.

2.    Organizational agility. When organizations understand the skills necessary to deliver work now and, in the future, and are aligned on the skills their workforce has, they can more quickly assess and move skills that are based on business priorities.

3.    Improved workforce performance and productivity. With a skills-based approach, organizations can better tap into all the skills a worker has – not just those they currently use in a specific job.

What’s more, businesses can better nurture and develop in-demand skills, and move talent with the right skills to where they are needed most.

4.    A sense of belonging. When work is structured around skills, employees can put their specific skillsets, strengths and interests to use around the organization, bringing them closer to business strategy. This can help breed a strong sense of belonging and loyalty. 

5.    Built-in diversity. A skills-based setup means DEI is more than a catchphrase. It allows organizations to make more equitable decisions based on an employee’s full range of skills, rather than their job description. Shifting the focus to value skills more than experience, education, or previous workplace, helps to avoid biases against certain talent groups – for example, candidates or employees who did not attend university.

A journey, not a switch, for TA teams.

Until now, leadership and development teams have been leading the charge when it comes to skills-based approaches. But talent acquisition teams have an opportunity to move the journey to the next level because of their unique position as gatekeepers for candidates at the start of their journey.

Forward thinking TA teams are already starting to embrace skills-based hiring. According to LinkedIn, recruiting professionals are 25% more likely to search by skills than they were 3 years ago and 75% predict skills-based hiring will be a priority for their company in the next 18 months.

Having said that, only 64% feel they can accurately assess candidates’ skills today. So, there is still some way to go for some organizations.²

To implement skills-based hiring effectively, day-to-day TA work itself needs to undergo a transformation. Of course, this level of organization change doesn’t happen overnight. Key pillars of TA teams’ processes (such as job descriptions, for example) cannot simply be removed with no alternative in place. But steps can be taken to move TA teams along the journey towards a skills-based approach. Rethinking how they source, interview and ultimately think about talent is the key.

Shared missions and definitions.

Organizations should begin their journey by pinpointing what the strategic and critical skills are within the organization. This is no easy task. Ask three people to define a critical skill and you'll get three different answers. Most managers think their roles or skills they are hiring for are the most important.

So, businesses must work out a shared framework, language and understanding of skills together. It means thinking through the skills that make key business strategies happen, those that disproportionately affect performance, and the skills that are hardest to attract, hire, and retain. It's vital everyone is on the same page before critical skills are cascaded into ways of working and conversations with candidates and clients.

Skills-based hiring success.

Working in conjunction with this crucial mindset change, there are a multitude of levers that can broaden TA’s approach to skills-based hiring. From building a skills-driven model for sourcing and attraction to creating ‘strategic skills teams’ that purely focus on sourcing and engaging talent with business-critical skills.

One of the most impactful actions that TA leaders can take is to train recruiters to better understand adjacent skills and shared skillsets across different role types or functions and really break down siloed ways of engaging talent. This puts TA in the driving seat to completely shift the conversations with Hiring Mangers – away from experience towards skills, challenging long-held assumptions about what makes a strong hire.