A Frank View on Skills: Is Your Organization a Fit?

Skills have been touted as a silver bullet to upgrading your talent function for the last few years. Skills-based organizations (SBOs) were promised to deliver data-driven decision making in every aspect of your talent organization, with trackable skills across your workforce and better employee development experiences. But is it truly the all-encompassing solution we’ve needed to solve our talent woes and bring the industry to the next level?

We’ve seen numerous vendors across the talent ecosystem jumping to get a slice of the ‘skills’ pie, from CRM to Social Search to LXP to People Analytics. Even our Talent Management ecosystem expanded to include Skills Management & Analytics vendors – vendors specifically dedicated to managing and analyzing skills within your organization.  “Skills” and skills-based organizations have become so commonplace, however, the market has yet to truly present a complete success story. We’ve seen success within department-wide pilots for internal talent marketplaces or gigs-first hiring in consultancies, yet no organization has truly succeeded in becoming a skills-first organization.

As an analyst, I work with numerous organizations looking to explore skills-based technologies and they all tend to struggle to determine whether SBOs are a fad or an expectation of talent organizations moving forward. But frankly, is that the goal for all talent organizations? And should it be?

How do you decide if your organization could benefit from skills? 

Rather than considering the benefits becoming an SBO would bring, I posit a different perspective – what is the personality of your organization? 

Organizations with a “reverse funnel” shape, i.e. organizations with a large entry-level employee base stand to benefit more greatly from skills-based approaches. These tend to be companies from retail, warehousing and healthcare industries, where high-volume hiring is prevalent. These high-volume roles tend to include employees from different walks of life, giving a skills-based approach some value as the organization can uncover hidden skills and opportunities to nurture an employee’s career path. 

On the flip side, organizations with many subject matter experts, or in highly specialized industries are not necessarily going to gain as much benefit from becoming an SBO. A great example of this would be a hospital or an aerospace manufacturing company. A strong majority of employees in these companies tend to seek degrees specialized in their chosen career path and spend decades building up a niche to become a subject matter expert in their line of work. These employees are not interested in gigs or internal talent marketplaces, and don’t particularly see any value in engaging in a skills-based approach as their career paths are inflexible. For example, an aircraft designer would not be willing to switch their role and work as a propulsion engineer – no matter how many gigs are offered to them. Or imagine asking if a surgery resident would want to consider an alternative career. 

Outside of these traits, other characteristics of organizations that can benefit from becoming an SBO include:

• Organizations struggling to hire/retain for specific roles -> requires identifying employees who would be interested in upskilling to the role

• Organizations with many ‘jack of all trades’ -> consulting firms and project-based work organizations

• Organizations struggling to identify successors -> successors can be trained through gigs

• Organizations looking to solve a specific resourcing problem (improve a business unit, redeploy business unit, redistribute employees following closure of business unit)

How should you implement skills in a resource-efficient manner?

Say your organization does fall into one of the abovementioned categories and would benefit from becoming an SBO – where do you get started and how do you execute it in a resource-efficient manner?

The reality is setting up an SBO takes a long time and large investment to see any results. The proof is in the market; existing early adopters of skills technologies are still in pilot phase. Some of these first-generation early adopters are Fortune 100 companies who have a lot more budget and runway to play with than other organizations, while the average company will have to be very calculated and precise about the improvement they want to achieve within the allotted time frame. 

The best advice I have to give to these organizations is to start small with a hyper defined goal, or to collaborate with an existing initiative in order to secure your funding. Skills-based technologies are not cheap, and the resourcing required to prepare your organization for skills prior to implementation will take months depending on your organization’s readiness levels. You’ve got to maintain a razor focus with what you want to achieve by implementing a skills-based approach.

The best success we’ve seen with pitching executives is to attach an achievable goal to the skills initiative. Not a goal relating to skills per se, but to the synergistic effects it will bring to existing investments. For example:

• Implementing an internal talent marketplace will increase our learning and development content and platform uptake by x %

• Implementing an internal talent marketplace will initiate x % of workforce into selecting a career development plan

• Implementing a skills-based hiring tool will upskill x% of recruiters to recruit by skills and avoid existing biases

• Implementing a skills engine will speed up workforce planning by x%

But where do you start? 

First generation early adopters went the traditional route of going down the list and tackling each component till perfection. This generation had to create taxonomies on their own from scratch, and guinea pig-ed these tools into maturity. The second generation of early adopters were able to achieve easier implementations through existing taxonomies and ontologies, established career paths, but struggled with connecting tools just like the first. Your generation will benefit from commonplace taxonomies, ontologies, skills management platforms, and skills middleware platforms.

There are multiple aspects of a skills-based organization, namely:

• Updated Job Architecture

• Internal Skills Taxonomy

• External Skills Ontology/ Skills Engine

• Skills Architecture/ Management

• Internal Talent Marketplace

• Gig Management

• Skills Middleware

• Learning Content Platforms

• Skills-Based Hiring

• Skills-Based Workforce Planning, etc.

• Culture Change/ Change Management

This checklist can get even the most confident organizations to balk and reconsider skills. As the third generation, you’re in the best position to get started.

1. Start with tools already in your arsenal. Existing TA/TM vendors have launched skills modules and products that you can expand into. Can you gain skills insights from your HCM/LXP/CRM? Can those skills insights better inform learning content purchases, creation of talent pipelines, identifying hard-to-hire roles? Utilize the insights these existing tools will bring and experiment with them first before attempting a complete transformation.                                                                         
2. Define your focus and select a solution to solve that first problem. So many organizations get caught up in the balancing act of trying to solve their immediate problem while also setting up the necessary infrastructure to build an SBO. Frankly, you won’t have the budget to build an SBO if you can’t prove initial success. 

Consider the following scenarios:

Scenario A: We want 20% of employees to commit to a career development plan by Q4 –> we need a tool that will help employees articulate their goals and aspirations and get recommendations for career paths, jobs, and learning content.

• Focus tool: Internal Talent Marketplace, HCM with ITM module, or LXP with ITM module. 

Scenario B: We want to gain an awareness of our organizational skills breakdown to identify key roles for successors –> we need a tool that can generate employee skill data with as little friction as possible and map it to labor market intelligence data.

• Focus tool: Skills Engine, Skills Analytics tool, LMI with Skills module.

Scenario C: We want to increase our candidate pipeline by 10% to reduce time-to-fill –> we need a tool that can parse applications by skills and help recruiters access candidates with adjacent skills.

• Focus tool: CRM with Skills module, Matching Tool with Skills module.

There are so many organizations that are so focused on proficiency and verifying skills that they lose sight of the forest – which is just getting a basic dataset of skills to fuel your internal talent marketplace

Don’t get hung up over validating/verifying skills or proficiency (and subsequent validation). The present-day reality is that the onus of validation and verifying skills falls upon the employer and there are very few vendors that have automated any form of validation. Employee profiles that are manually created tend to skew towards extroverted male employees, based upon similar data and habits already seen in job applications and resumes. Sometimes the best solution is the easiest one. Our best practice is to recommend managers open the completed employee profile upon the next 1:1 or quarterly performance review and have a conversation with the employee about the skills and proficiencies selected. 

What can you realistically achieve with skills today?

The skills technology market has made great strides in the last five years, with mature skills ontologies, skills middleware technologies and automating employee profile generation. However, it still falls short with respect to many other SBO components – namely proficiency, skills definitions, validating/verifying skills, automating career paths, change management support. 

You’ve got to pick your poison:

Manual employee profiles reveal more about skills and aspirations BUT employees need to be convinced to reveal skills AND manual profiles are skewed towards extroverted males.

Talent marketplaces allow employers to create career development plans BUT need to fill the marketplace with gigs, opportunities, and content to fuel career development plans.

After all this, are skills even worth it? Frankly, for many organizations, no. 

Unless your organization is willing to do the ‘homework’ and overhaul their job architecture, internal culture, manager mindsets, promote tool usage, manage gigs, create opportunities, etc. It’s just not worth it. Organizations that are willing to put in the work, that have executive buy-in and are suitable candidates for an SBO will eventually develop into one, and they will benefit from all the fruits of their labor. 

Other organizations can also benefit from skills-based approaches without becoming an SBO by:

• Incorporating skills-based career conversations in 1:1s, reviews. Mandating managers to encourage employees to define a career path and work towards it.

• Create upskilling opportunities through LXP, SDL platforms. 

• Create learning academies focused on specific skill groups to promote career paths aligned with business priorities.

• Activate skills in CRM and train recruiters towards skills-based hiring practices.

• Purchase a tool that passively infers skills data and informs workforce planning decisions. 

The beauty and power of skills-based approaches is revealed when it is not over-engineered. The goal of skills data is to, ultimately, inform decision-making, not to be the sole data point to make decisions. It will be a combination of your skills data, budget, labor market intelligence, and business needs that will determine the direction of your talent strategy. 

Skills aren’t for every organization, but neither do they need to be. It’s more important to identify if your organization can benefit from these approaches and where to integrate them to maximize your wins and minimize your resource spending. 

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