So, what exactly is a ‘skills-based organization’?

A whole new operating model for the future of work

Organizations the world over are facing a growing skills crisis as technological disruption alters the skill sets needed for jobs. It’s getting harder and harder for talent teams to find and retain the right people with the right skills to fill the right roles. 

Behind this struggle are the likes of digital transformation, automation, and generative AI, and the rate at which these technologies are reinventing the very nature of work is accelerating as more than 75% of companies are looking to adopt technologies like big data, cloud computing, and AI within the next five years. 

This means that finding the right talent will continue to be a challenge because, as things currently stand, there will be fewer people with the right skills as workforce demands shift. According to McKinsey, one in 16 workers may have to switch occupations by 2030 across eight major economies, and of those who remain in the same occupations, 40% will need to reskill. 

In response to this challenge, some organizations are radically rethinking how they structure roles and responsibilities, how they hire, and how they develop talent. The result is a total organizational transition to becoming a skills-based organization. But what exactly is a skills-based organization?

‍

What is the definition of a skills-based organization?

There’s a lot of opinion surrounding this topic but here at SkyHive, we define a skills-based organization as — An organization that places skills at the core of talent management strategies by allocating workers to opportunities based on their skills and capabilities. The transition towards a skills-based organization represents a major shift in how a company thinks about its people and the work they do. 

A skills-based organization recognizes that people have a wide range of unique skills and capabilities that they can use to benefit the wider organization. It’s a move away from the traditional rigid focus on job roles, which focused on defining and managing roles rather than individuals and their skills.  

This approach enables skills-based organizations to achieve much greater agility because they’re able to pivot and reallocate talent quickly in response to real-time demands. This is particularly important today when the so-called Fourth Industrial Revolution is fundamentally changing the nature of work and the skills needed to succeed in the long term.

‍

What does a skills-based organization look like?

A skills-based organization places less emphasis on degrees and qualifications and instead focuses on a worker’s actual skills. It also champions internal mobility, and continuous learning, and decomposes traditional job roles into specific tasks and projects. 

‍

Less focus on degrees and diplomas

A skills-based organization shifts the focus away from traditional qualifications towards the actual skills and competencies that workers bring to the table. This prioritizes hands-on experience, practical knowledge, and the ability to perform specific tasks over formal degrees and diplomas, thereby helping to increase diversity in the talent pool. 

Focusing on skills over qualifications also encourages continuous learning and development. This is because employees in a skills-based organization are evaluated on their ability to adapt and learn and are motivated to acquire new skills as a result, rather than falling back on their educational background. 

‍

Breaking down work into tasks

Skills-based organizations break down traditional job roles into more specific and measurable tasks and projects. Deconstructing traditional job roles into tasks helps teams to dynamically allocate work to individuals based on their specific skills and expertise rather than their job title. A marketing campaign, for example, might be handled by a team with skills covering graphic design, social media, content creation, and data analysis. 

This not only maximizes efficiency but can also help to enhance employee engagement. Employees will feel fulfilled by taking on tasks that closely align with their strengths, experiences, and interests. It also fosters an agile working environment where teams are equipped to quickly adapt to changing business needs. 

‍

Championing internal mobility

Providing opportunities for career advancement and growth within an organization can significantly enhance employee retention rates. When employees see a clear path for development and progression, they are more likely to stick around. Skills-based organizations should therefore champion internal mobility by creating pathways for employees to move between different teams and departments based on their skill sets. 

By promoting internal mobility and equipping employees with the skills needed to pivot in response to business needs, leaders can foster an agile workforce that can plug skills gaps and address digital transformation-era challenges. Given that more than 85 million jobs could go unfilled by 2030 due to a lack of skilled workers, all organizations should be looking to make internal mobility a pillar of their talent management. 

‍

Emphasis on continuous learning

Continuous learning is embedded in the DNA of any skills-based organization. Employees are provided with regular opportunities to upskill and reskill through training programs, workshops, and access to online learning programs. This commitment to ongoing education ensures that the workforce remains competitive. 

Continuous learning initiatives also help employees to stay engaged and motivated. When workers have the opportunity to develop professionally, they’re more likely to feel satisfied in their jobs and remain with the company in the long term. It also helps to drive innovation throughout the organization as employees are both empowered and equipped to bring new ideas and solutions to the table. 

‍

Flatter corporate hierarchies

Skills-based organizations will usually adopt flatter corporate hierarchies by eliminating middle levels of management to encourage a more collaborative work environment. By reducing the number of management layers, skills-based organizations encourage open communication, faster decision-making, and empowerment because a flatter structure allows employees to take ownership of their tasks. 

In contrast, role-based organizations are often the opposite: Monolithic structures with several layers of management, each doing its bit to support corporate bureaucracy against a backdrop of pre-determined rules and the status quo. All this does is slow people down and prevent good, productive work from being done.  

‍

How to foster a skills-based organization

‍

Take a skills-based approach to recruitment

To achieve this, organizations must make changes in three key areas: job listings, hiring criteria, and the assessment process. 

• Job listings: Overly prescriptive job listings may deter top talent, so hiring organizations should review the language used to ensure it is inclusive and focuses primarily on skills. This will attract a more diverse and qualified pool of applicants.

• Hiring criteria: Education, qualifications, and work experience don’t necessarily correlate with on-the-job performance, so organizations should consider removing hiring criteria that exclude candidates from less traditional backgrounds. 

• Assessment: A robust and skills-focused recruitment process negates the need for prescriptive job descriptions and rigid hiring criteria since candidates are hired on merit. Tools like skills assessments are the most effective way to assess candidates, as they objectively evaluate skills and capabilities rather than focusing on subjective factors like “cultural fit.”

There are various ways to ensure talent management activities are centered around skills. This includes investing in learning and development programs that focus on skills development rather than job tasks, developing skills-based compensation policies, making skills development and application the focus of performance reviews, linking skills development to promotions and pay raises, and providing opportunities for on-the-job hands-on learning. 

‍

Empower agility and cross-functional teams

Skills-based organizations are characterized by flexibility, adaptability, and agile methodologies. These play a crucial role in providing a foundation where individual skills can be utilized and developed effectively. Agile teams are self-organized, encouraging employees to leverage their competencies and work autonomously. Examples include Scrum, which organizes work into manageable tasks handled by cross-functional teams in sprints, and Kanban boards, which visualize and manage work and skills.

These cross-functional teams are made up of employees with diverse skills and experiences from various parts of the company. They promote collaboration, information sharing, and mutual learning, thereby increasing organizational flexibility and adaptability. In skills-based organizations, cross-functional teams are formed based on the required skills for specific projects, promoting optimal skill utilization and development.

‍

Build a skills inventory and constantly review it

You can only be a skills-based organization if you know what skills you have at your disposal. You’ll need to do some skills mapping and put together a skills inventory for this. Start by conducting a thorough assessment of your employees' current skills, experiences, and proficiencies. Use surveys, self-assessments, and performance reviews to gather this data. Once compiled, organize the information into a comprehensive database that is easily accessible and searchable.

Regularly update this skills inventory to reflect new skills acquired through training, development programs, or job experiences. Continuously reviewing and refining this inventory ensures that you have an up-to-date understanding of your workforce’s capabilities, allowing you to deploy talent, identify skill gaps, and plan for future needs effectively. At SkyHive, our skills inventory solution makes it easy to identify skill requirements at the individual, department, or location level and adapt to changing needs on the fly. 

‍

The future of work is skills-based

Recognizing the impact digital transformation has on the world of work, organizations are moving away from the old-fashioned strategy of relying on rigid job descriptions and roles in favor of the skills-based approach. Naturally, then, there’s a lot of discussion around what this means.

‍

‍

At SkyHive, we recently collaborated with a podcaster out of Stockholm to talk about what it means to be a skills-based organization. We also talked about:

• How so many employees are saying "But I'm not willing to ..."
• What employees are saying on Glassdoor
• Skills and the onboarding process
• Three questions to ask yourself about your skills-based organization 
• The silly "30 percent travel" requirement: why becoming a skills-based organization can improve diversity.

The podcast, Edtech Tuesdays, is produced by Snabbfoting and covers learning, culture, and technologies, interviewing “innovators, investors, thinkers, and doers changing the status quo.” 

Listen to the podcast for free on Spotify and Apple Podcasts.