Are Skills “Units” That the Market Can Measure? Part 2

Introduction

In the first article in this series, I illustrated the difference between CBT (Competency-Based Training) and Beruf. The former is more common in English-speaking countries, and the latter in Germanic countries. These skills paradigms are also linked to the extent to which a country’s market economy is liberal or coordinated. David Hall and Peter Soskice (2001) presented a seminal piece of work on “Varieties of Capitalism”, which distinguishes between “Liberal Market Economies” (LMEs), which, just like CBT, are more prevalent in English-speaking countries, and Coordinated Market Economies (CMEs), which are more common in Germanic countries, where Beruf is also a feature. CMEs see greater collaboration in the economy between businesses, unions, and government, and to a large extent, the education system that produces skilled workers. This coordination, of which Beruf is a product in some instances, creates more stability in the skills market because even competing organisations, by virtue of collaborating in industry associations and negotiating with the same unions and schools, hold similar views on what skills are needed for which trades and professions. However, the downside of this is less flexibility across the job market for individuals because of how coordinated employers are, as well as the defined silos for an occupation.

In a Liberal Market Economy (LME), colloquially described as a ‘proper’ free market or “laissez-faire market”, there is less collaboration amongst competing businesses, a less prominent role for unions, and less government intervention. This liberal environment also impacts the extent to which skills can be coordinated and universally understood. This is why, in this type of market, which I will focus on today, measuring skills across the board is more difficult. The advantage for workers is that they are more flexible across the job market, due to lower restrictions and 'siloing' of occupations. Having set up this context, I will now focus on how competing organisations' cultures impact skills measurement and interrogate whether we can harmonise the definitions of skills across different organisations.

Impact of Organisational Culture

In a market with less coordination across organisations, the concept of “skills” becomes difficult to harmonise. Instead, skills end up being defined in the shadow of the overarching culture of an organisation. What one organisation might consider “strong problem-solving skills”; another might consider “misplaced” – even if they belong to the same industry. This makes the paradigm of “unit” or “modular” skills more difficult to apply because these skills are less “transferable”.

To illustrate this, let me use two case studies of technology behemoths with distinct cultures. The first is Zappos, an online apparel retailer whose paramount culture is defined in the tagline “Delivering Happiness”, both for customers and employees. The second company in this case study is Netflix, the world’s biggest video streaming service, whose core culture is encapsulated in the tagline “We’re a team, not a family”. These may seem light-hearted and inconsequential to skills, but their implications on our understanding of skills underpin the major question of this article series.

Let’s dive into Zappos first. Zappos was founded in 1999 and is one of the world’s largest online clothing retailers. Their company culture is seen as fun and quirky, stemming from its fashion and creativity-centred offerings. The tagline “Delivering Happiness”, which impacts employees as much as customers, means that managers and even colleagues centre everything—from their feedback to their performance review system—on maintaining the harmony of this culture. So, if someone is seen to be a “skilled communicator”, there is a strong chance that they display not only clarity in the ideas they synthesise but also the ability to keep their colleagues feeling valued and happy. A skilled problem-solver is probably not just someone who can optimise efficient workflows, but one who also considers how their colleagues and subordinates will receive the workflow recommendation, which is the result of the problem-solving. There are likely performance management systems in place to ensure that skills like communication and problem-solving are measured against the company’s culture and values. This makes it easy to understand these skills WITHIN the organisation, evaluate employees, and bestow status and prestige on them. And if the company is as successful and long-running as Zappos is, then surely these skills can be measured and even used across the market?

Our second case study is Netflix. Netflix was also founded in the late 1990s, in 1997 to be specific, and although their product offering is different—video entertainment—their distribution and technology frameworks are similar to Zappos’. Netflix is less concerned with “Delivering Happiness”, particularly internally, and instead operates under the tagline “We’re a team, not a family.” The company sees itself as operating like a professional sports team, which prioritises high performance, attracting and retaining top talent, and not being afraid to let go of “low performers”.

So how would a “skilled communicator” be valued at a firm like Netflix versus Zappos? Perhaps someone who is a bit more direct and more concerned with synthesising ideas that focus on business matters and less so on the audience receiving the communication? What about problem-solving? Does it matter how people “feel” about the solution one is presenting, or does it matter that the “solve” optimises workflows and delivers better products? At Netflix, someone who was rated a “skilled communicator” or "problem-solver" at Zappos, might find themselves “underperforming” because they do not display the skills that Netflix's culture values and distils. The same can be said of the situation in reverse, a former Netflix employee at Zappos might be rated an “unskilled communicator” because their communication is not received well by their colleagues, and thus they are less effective and less productive.

Impact on Skills Measurement

Why are these case studies so integral to our understanding of measuring skills? And what about technical skills? Well, these case studies and their illustration stand in stark contrast to the discourse of the day, which frames skills as modular units that the whole market can understand. “Teach for one, and you teach for all!”, right? However, the assumptions of CBT do not immediately translate to reality, at least not in the world of technology. The same goes for technical skills. Although these skills are more easily measured, in the world of white-collar work, a software developer, business analyst, or even an engineer is not only judged by the products or models they create but also by how these artefacts fit into the broader objective of the company and its mission in the market.

If you are a software developer working in a company whose culture prioritises speed and quick market entry, with little regard for the elegance of the code and finishing touches of the product, then your skill set will be refined in such an environment and probably less valued in a company where coding production happens more slowly, elegantly, and with special attention to detail. Again, this is less pronounced than with soft skills, but it still matters because what is considered a “technically proficient” coder or analyst in one firm might be considered “sloppy and inelegant” in another, or ?the reverse, “slow and inefficient” .

Is There Harmony?

The culture of a firm has a significant bearing on how skills are measured and valued across an industry. This makes skills start to look less and less like “units” that are universally valued in a market, like fossil fuels and metals, and instead more context-specific and culturally relevant. This isn’t to say that skills are not transferable at all, and that is not the major takeaway of this article. It is clear from data and even our own anecdotal evidence and personal experiences that it is possible to move from one organisation to another, and even from one industry to another. This is the everyday reality of the labour market, and I am neither trying to dispute this nor making a case against measuring skills. It is still important to prepare young people for a variety of opportunities and for businesses to set up their workers for long-term success with skills that they can use in various settings and contexts.

However, it is also important to interrogate why we view skills as being modular, and?why we teach them as units to so many people, and yet employers still complain about a “shortage of skills”. This is because we often value skills in relation to how they serve the interests of a specific organisation. Thus, if you look at the market and see that it lacks the skills your organisation needs, it is easy to claim that there is a shortage. However, if you were to transcribe the skills that workers have in a market, you would soon realise that they probably do possess the skills you name, but they do not display them in the way that your organisation needs.

The market is filled with “skilled communicators”, analysts, coders, and administrators, but our attempt to measure their skills in a modular fashion has not borne fruit because many organisations frame skills supply and demand not across industries, but around their specific needs. So, two CEOs can sit on a panel discussion and decry skills shortages, but if you asked them what skills they’re referring to, they might name the same set of skills but define them differently depending on the overarching culture built in their specific organisation or even industry/sector.

Conclusion

Having defined two dominant skills paradigms—CBT and Beruf—and having looked at how CBT is understood and misapplied in the labour market, it is now time to discuss where South Africa’s own skills aspirations are influenced by these factors and which conversations are helpful or not. In the third and final article in this series, I will look at the effects of CBT, the needs of businesses, and what students and workers have to offer in the South African economy and labour market.

Hall PA, Soskice D. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford University Press; 2001.