April 18, 2023

The Cultural Changes Needed to Become a Skill-based Organization

The Cultural Changes Needed to Become a Skill-based Organization

Talk of skills is everywhere. It dominated last fall’s HR Technology Conference in Las Vegas. It’s the subject of a recent book on the deconstruction of jobs. Countless blogs and webinars are talking about a new world of work, where skills replace jobs.

But what does this mean, in practice? What must an organization do, what must it have in place, what policies and culture must it develop to become a skill-based organization?

Turning to skills is more than adopting the latest technology. It’s about making changes throughout the employee lifecycle (as outlined in a new eBook). This includes:

  • Architecture: the blueprint for success. Your architecture is a starting point to becoming a skills-based organization. Architecture allows you to identify the skills and expected proficiency levels required for each of your job roles.
  • Learning & Development. Employees need a plan as to where they want to go, and grow, in their careers, and need to be able to visualize the skills they need to add to get there.
  • Screening & Interviewing. In short, organizations need to hire based on the skills a person has; skills a candidate has the potential to add; skills the candidate would like to build for their own career growth; and based on skills that a candidate has that are transferable to open positions. In addition, organizations should hire not just based on an open job, but based on future needs. A new hire is unlikely to be doing the same work a year later.
  • Onboarding. Like job interviews, onboarding has progressed from how to find the breakroom to deeper immersions in corporate culture. But skill-based organizations take a slightly different route. They use onboarding to help new hires discover not just how to do their job, but also: who they might meet in the organization whose skills match what the new employee wants to learn; what projects the new employee may want to take on to add or hone desired skills; and, courses the new employee might want to take to add desired skills for future internal mobility.
  • Pay & Rewards. When it comes to moving to a skills approach, pay is an area lacking attention. Ravin Jesuthasan, Senior Partner and Global Leader for Transformation Services at Mercer, suggests “benchmarking the market price for capabilities, skills, and work elements instead of jobs. How might we value the bundle of skills required to perform the typical work demanded of a team? Can we deconstruct the pay to reflect the value of various skill combinations?”
  • Career Development. One organization on a journey to a skill-based organization is Merck. Eric Ervin, Executive Director, HR Operations at Merck, tells Diginomica that Merck “started to look at what was driving some of our retention challenges. Much of that was around not really understanding what their career journeys could potentially look like at Merck — how could the capabilities that I have translate to other jobs and other opportunities within the organization? And then the other piece was organizational agility — the skills capability of taking a set of resources and retraining them, versus having to go out and hire for an entire new skill set.”
  • Performance Management and Promotions. A skill-based organization role would promote people to management positions much differently than is the status quo. It would break down what’s needed in a management role and match that to the skills of each employee. Excellent managers of people would surface for management roles. Great individual contributors could be promoted to new and more interesting and better-paid individual-contributor roles rather than having to fit themselves into management boxes because there’s no other way to advance.
  • Projects and Work Deployment. A move to a skill-based organization means you always know "who can do what," and can deploy people on short-term projects.
  • Workforce Planning and People Analytics. Workforce planning in a skills-oriented organization means planning for the skills necessary to remain competitive over the coming years, not just the jobs that must be filled now. Deloitte notes that “with a skill-based approach to workforce planning, organizations can plan for the skills they need, where they can get them, and the type of work in which skills will need to be applied.”
  • Layoffs and Redeployment. If an organization has hundreds of open roles while laying off thousands, surely there must be opportunities to reskill through skills-based internal mobility, and save on the many expenses associated with layoffs (including severance, potential tax increases, loss in productivity, hiring costs, negative public relations, potential employment lawsuits, an impact on customer service and potentially lost business as a result, lower engagement among remaining employees, and more).

Check out the new eBook for much more on becoming skills-based.

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