In 2024, a Skills-Based Approach is the Key to an Agile Workforce

In 2024, a Skills-Based Approach is the Key to an Agile Workforce

Agile Workforce = Skills-Based Workforce Planning x Skills Intelligence

Building a robust talent management process and fostering an agile workforce in 2024 doesn’t need to be complicated. The formula is simple: Take a skills-based approach to workforce planning and marry it with skills intelligence technology. That’s it. 

However, given the way workforce challenges have been portrayed in the media for the last few years—the “Great Resignation,” talent shortages, and skills gaps, just to name a few—you’d be excused for believing that the odds are stacked against you when it comes to achieving an agile workforce.

The truth is that as long as you’re embracing agility at an organizational level and keeping ahead of how the workforce operating model is evolving, you’ve got nothing to worry about. 

But what do we mean by that? 

We recently explored how AI-powered skills intelligence is helping to lead the way in skills-based organizational transformation with Forrester. The report—AI Powered Skills Intelligence Is Now A Necessity, Not A Luxury—is free to access and provides further insight into the urgency of implementing the right skills intelligence for your organization.

Moving Away from the ‘Job Role Mindset’

Jobs have been the dominant workforce structure for centuries. They’ve defined everything from how work is done and who is responsible for it to hiring, career progression, and performance management. 

Known as the ‘job role mindset’ or the ‘role-based approach,’ it focuses on defining and managing roles rather than individuals and their skills. However, with the continued proliferation of technology and changing attitudes to work, it’s quickly becoming a thing of the past.

That’s because leading organizations recognize that siloed working, standardized tasks, and decisions made solely on workers’ roles hinder critical objectives such as agility, growth, innovation, and diversity. In response, they’re moving toward a new operating model that places skills at the core—the skills-based approach. 

What is a Skills-Based Approach?

The skills-based approach to talent and workforce management focuses on an employee’s skillset rather than their defined function at a company. Although this may seem like a slight change in perspective compared to the role-based approach, it’s redefining how organizations hire talent, perform tasks, and achieve their objectives. 

Fundamentally, the skills-based approach puts people and their skills at the center of talent strategies and breaks down traditional jobs into projects and tasks based on the capabilities needed to achieve them. This deviation from the role-based approach means that employees are valued for their skills and potential rather than their job title or level of seniority. 

With 70% of companies choosing to adopt skills-based hiring methods in 2023—a figure that’s expected to grow year-over-year—it’s impossible to dismiss the transformative impact that this shift in focus from jobs to skills will have. Adopting a skills-based approach is non-negotiable if you’ve got any desire to foster an agile workforce that’s tasked to deal with your long-term challenges. 

Key Objectives of the Skills-Based Approach

The skills-based approach has three core objectives:

  1. To prioritize skills over traditional role requirements, such as GPAs and college degrees. This broadens the talent pool and opens the door to people with hands-on experience who can do the work needed.
  1. To deconstruct jobs into defined tasks and “work to be done.” This provides teams with visibility into the skills needed to complete tasks and organizes them according to these required skills vs. traditional job roles.
  1. To provide an overview of the organization’s overall skills profile. This helps to inform talent acquisition and development processes and ensures that the right people with the right skills are matched to mission-critical tasks. 

Let’s put all this in context with a scenario:  In a traditional role-based approach, someone with “marketing” in their job title would only be considered for marketing related roles, or perhaps roles that are associated with similar skills, like good communication. However, this approach might neglect that this person also has superior analytical skills and a penchant for working with data—overlooking a great internal candidate for the new data science role that the business requires. A skills-based approach allows your organization to see the individual in the context of their entire skill set, which makes for better job matches, and happier, more productive people.

Why is a Skills-Based Approach Important?

One of the many reasons a skills-based approach has become a priority for organizations is the desire for greater agility. Although organizational agility means different things to different people, it’s generally accepted as an organization's ability to renew itself and adapt quickly to rapidly changing environments. 

Skills-based workforce management feeds into agility by making it easier for organizations to identify their employees’ existing skillsets, training and development needs, and critical skills gaps. It also provides HR and talent leaders with genuinely helpful information for building hiring strategies and development plans that help to skill match and upskill their workforce, which in turn helps to meet long-term goals and prepare for shifts in strategy. 

The Need for Reliable Skills Intelligence

As we've discussed, the move from a role-based to a skills-based talent and workforce management approach brings various organizational benefits, such as heightened capabilities, more agility, and a generally improved readiness for meeting long-term goals and objectives. 

There are two sides to every coin, however, and these benefits are balanced by several challenges that can be experienced when implementing a skills-based practice: A lack of skills visibility, an inability to identify required skills, and a high level of complexity in collecting skills can all stand in the way. 

Unlike the traditional roles-based approach, which was largely rigid and static, the skills-based approach is fluid and dynamic because employees constantly learn and grow. In a skills-based organization, changes occur on the fly with each passing day, and to keep up, leaders need visibility into what’s going on to anticipate what’s next. 

This is where skills intelligence comes in—or, more specifically, AI-powered skills intelligence, as we’ll discuss later.

What is Skills Intelligence?

Skills intelligence is the ability to look at the people, roles and training programs in an organization through a prism of respective constituent skills.

Before the dawn of AI and tech-enabled tooling, HR teams had three options for managing their skills intelligence: 

  1. Expanding competency models to include skills required for each role.
  2. Use a worker’s job description as the only view of their capabilities.
  3. Build and maintain their own skills management spreadsheet.

All three of these options have apparent limitations, and even when used together, they are generally viewed as unsuitable in roles-based organizations. For modern skills-based organizations that need to keep up with a skills environment that can change daily, these options don’t come close to cutting it. But as with most things nowadays, a solution can be found in AI. 

AI-Powered Skills Intelligence

Recent innovations in AI-powered skills intelligence are helping organizations alleviate many of the pain points associated with managing skills intelligence at scale, thereby solving the challenges we identified earlier. 

This is primarily achieved by implementing powerful skills intelligence tools, which leverage real-time labor market data, automation, natural language processing, and deep learning architectures to enable constant, real-time analysis of organizational skills profiles. It gives us the ability to:

  1. Translate business goals into the language of skills.
  2. Define which roles and skills are required to meet business needs.
  3. Identify who within the company currently has those skills or could easily acquire those skills through additional training.
  4. Determine what training and development is necessary to do the latter.

While the specifics can vary between different tools, it’s critical to ensure your skills intelligence technology provides:

  • Automated Skills-Based Job Architecture: Transitioning to skills-based requires translating static and often dated descriptions of “work” (jobs) into dynamic, skill-first definitions. This means taking job definitions from spreadsheets or HCM systems of record and converting them to the language of skills. This cannot be a one-time translation and needs to be automated for continuous translation from real-time labor market intelligence. This applies to the HR job definition (typically called a ‘job profile’), the positions assigned to specific employees, and the job postings used for candidate recruitment. 
  • Skills Standardization at Scale: HCMs and other systems store transactions, workflow events and documents that hold unstructured but valuable information about employee skills. AI-powered skills intelligence should allow you to extract, augment, and standardize the skills and skill proficiency for each employee. 
  • Real Time Internal & External Skills Intelligence:  Without outside-in labor market intelligence, organizations cannot foresee or monitor the changes in required or demanded skills. Access to real-time trends and shifts of skills in the labor market by time period, geographies, and jobs can be used to identify what skills are required and optimize strategic workforce planning. 

Accelerate Your Transition from Roles-Based to Skills-Based

Recognizing the drawbacks of focusing on jobs and roles, organizations are quickly moving to a skills-based approach to workforce management. This approach focuses on the whole employee and their unique skillsets rather than religiously swearing by rigid job roles and descriptions.

Organizations embarking on this transition must understand what it means to be a skills-based company and have the right tools available to make their transition successful. AI-powered skills intelligence technology is perhaps the most critical of these tools because they help HR teams keep up with their organization’s dynamic skills inventory by integrating the very best of automation, natural language processing, and deep learning. 

Want to learn more about how AI-powered skills intelligence leads the skills-based revolution? We're providing complimentary access to Forrester's recent report: AI Powered Skills Intelligence Is Now A Necessity, Not A Luxury

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