Skills are unleashing human potential and fueling agility towards a skills-based organization

A skills-based organization (SBO) is a key topic that has emerged as a popular model among C-suite executives, HR and learning leaders, who recognize the power of skills.

By shifting their organizational strategy from jobs to skills, companies have found themselves better equipped to meet the demands of a constantly evolving business environment.

However, the transformation requires a new way of working and takes a lot of change management because it's a whole new way of looking at how people work.

How do we take people on that journey and make sure we communicate it in a meaningful way?

This article is based on discussions in the Roundtable Skills Discovery session, with learning leaders and senior HR professionals.

Different perspectives for collecting skills and the need to organize work rather than organize skills are being explained. We zoom in on elements for the skills-based transformation and what keeps organizations from making the transition.

Let's start from the beginning.

In short a skills-based organization,” or SBO places skills and human capabilities at the heart of talent strategies, creating a new operating model for work and the workforce.?

• Skills strategy is part of their business strategy and not their HR/L&D strategy
• Human centric instead of organization centric, skills as red thread based on skills match not experience
• Promoting people is based on skills development and what we call ??? SKILLS DIALOGS by weaving into performance discussions
• Personalized learning is organized for what we call GROWTH SKILLING and based on skills gaps analysis
• Strategic "Skillsforce” planning based on skills and work needed instead of based on experience fit to role
• Skills data is decentralized, highly accessible for every employee and collected in line with the strategy instead of using only data in HRIS

“85% of HR executives say they are planning or considering redesigning the way work is organized so that skills can be flexibly ported across work over the next three years.” Why?

Because skills-based organizations are…more attractive to retain & grow talent, for a more productive & positive workforce.

Skills-Based Organization Model for the Future of Work

To realize a skill-based organization we use the Skills Building Blocks (SBB) to maximize value out of skills. How does the SBO model work??

1. Develop and execute a Skill Strategy, that’s part of the organizational strategy, aligned to the company's objectives & purpose for employees. Clear communication of the what, how, why and who.
2. Develop a skills culture and execute a solid process & principles for successful Skills Management in the entire organization.?
3. Deploy the right technology, easily to use and supported with an understandable and effective methodology to generate quality Skills Data. With insights for self development, growth, fulfillment and value-driven decisions being made to achieve business goals and personal objectives.

The Skills Building Blocks should be related to, what we call SKILLS ORGANIZATIONAL ACTIVITIES like:?

Strategic Workforce Planning, Learning & Development, Recruitment, Performance Management, Leadership and Talent Development.

How to become a Skills-Based Organization

Hannah Smith of Fidelity?is highlighting the importance of change management and a new way of working. She notes that while it's a significant shift, it's necessary for the future of work. Talent optimization and internal mobility are more critical than ever for business agility and continuity. Take people on the journey and make sure we communicate it in a meaningful way.

1. Implement a more flexible, agile job architecture - move away from hierarchical job architectures to something more agile and fluid. A project-based work unit is a start where skills are matched at the project level and creates a valuable starting point, using talent marketplace technology to deliver visibility, keep track of skills and facilitate more agile working practices by enabling skills matching at the project level.
2. Taking a skills-based approach to talent development - consider critical principles for a skills-based approach to be successful:

• Establishing a shared vocabulary of skills throughout the organization.
• Integrating skills assessment and development into performance management.
• Using Talent Marketplaces to match skills with specific job roles, tasks, projects, short-term assignments, and mentorship opportunities.
• Developing learning and development programs that prioritize skills acquisition over traditional job-based training.
• Shifting to a skills-based approach to talent acquisition and recruitment.
• Designing compensation policies that recognize and reward skills attainment and mastery.
• Incorporating skills data and analysis into succession planning to identify and groom talent for leadership roles.
• Utilizing technology to provide transparency and track progress in skills development initiatives.

A focus on skills can improve the effectiveness of talent development initiatives in the following ways:

• Increasing transparency of skills across the organization.
• Identifying areas where employees lack critical skills, which can help inform targeted upskilling efforts.
• Establishing a shared language for discussing and managing skills and talent throughout the organization.
• Incorporating skills management strategies into talent management initiatives, which can facilitate ongoing upskilling and reskilling opportunities.

4. It's essential to implement agile methodologies to achieve success as a Skills Based Organization. Agile values, such as prioritizing individuals and interactions, customer collaboration, and adaptability over sticking to plans and processes, are fundamental to the success of Skills-Based Organizations. Organizations that prioritize agility can optimize organizational, talent, and career agility and build a culture that promotes skill development and upskilling initiatives.

Aparna Ranadive of Practical Magic Leadership Consulting reminds us that mindset shift isn't easy. Agility, leadership and adaptability for example are critical skills in this new paradigm, and organizations need to be prepared to teach and develop these skills.?

Benefits of Skills-based practices can help employers up skill workers and provide learning opportunities to enable internal mobility and boost retention.

Daniel Nilsson of MuchSkills takes an approach by focusing on the importance of having outstanding conversations about development and focus, rather than striving for perfect skill measurement. He highlights the importance of identifying the most important skills for a team or department and ensuring that employees are focused on developing those skills.

“The skills conversation is not about perfect measurement, but about development and focus on the most important skills” - Daniel Nilsson

Hannah agrees. "As we start to have these conversations, people really want to understand how skills will be measured and how we can determine proficiencies. It's important to get into the details, but as you mentioned, we need to focus on identifying the top skills and then take development actions to improve them, especially the critical ones."

Deciding to what level measuring which skills

When it comes to measuring skills, a taxonomy could be a useful tool in this regard, but can be complicated because we need to decide at what level we should measure these skills, Daniel explains.

"Should we measure cloud computing as a skill, or should we measure specific platforms like Amazon Web Services or Azure?"

For instance, should we measure cloud computing as a skill, or should we measure specific platforms like Amazon Web Services or Azure? Under Amazon Web Services alone, there are over 100 sub-services. This makes it difficult to determine at what level we should try to measure these skills. We could use a broad category like cloud computing and determine if someone is a beginner, intermediate, or expert, but that might not provide enough detail. Alternatively, we could measure specific skills such as expertise in a particular sub-service.

Depending on the organization you need to figure out what makes sense and what will be the most effective in helping your teams improve.

Fedor Hagenaar of Komensky believes there are basically two different approaches." One approach that is commonly used is the skill clouds approach, for example, LinkedIn and Techwolf. Their approach is both simple and complicated because they extract specific tags from vacancies and job descriptions and then use these tags on the same level to let the system learn whether or not there's a relation. The relation itself is not defined; it's just two tags that are in the same profile, and then there's a relation. Two tags that aren't in the same profile, but they exclude each other; it doesn't really matter. It's not defined; it's still a relation. The huge amount of data filters out all the stuff that doesn't work.

However, Fedor and his team have tried to create a structured ontology that will help organizations build their skills. For them, skills are on a higher level in terms of abstraction. They consider computational modeling to be a skill, but a specific tool under it is not a skill. They refer to them as keywords, topics, refinements, or specialties. For them, a skill is something that you can develop, and it is something that can be validated over time. On the other hand, Excel, R, or React are not skills per se, but rather things that you can build knowledge on.

For them, programming is a skill, and it is possible to become a better programmer. They can make that visible. It's not that one or either one of the two approaches is better; it depends on where you're coming from and what you're trying to achieve. For them, building skills is very important, so they need to show people what a skill is in detail. They provide a generic description per level and specify the knowledge and abilities required per level. They believe, and their research backs this up, that people need to have an understanding of what they want to obtain or achieve. It is not enough to just name something "project management." They need to describe project management at that level and what it refers to, such as a training of specific project management methods used in the organization.

Different perspectives for collecting and mapping skills

Let's emphasize the importance of a higher level skills inventory and not overcomplicate it. Organizations should start making a skills collection or skills inventory instead of a skills taxonomy. For example for HR it is also of value in what program languages someone can develop instead of only knowing how many programmers there are.??

“If you are looking at it from a talent marketplace, you want to know how many people understand R or Angular. From a vacancy perspective or job matching perspective, that’s very important to understand.?

From a skills-building perspective or a role mapping perspective, that is less important. It's much more important that, let's say if you are HR business partner, that you understand that there are maybe 10 to 15 skills that relate to the critical work functions and tasks that are in your role.

It's a different thing, but organizations should do both, because they have different goals.

Organizing work vs organizing skills

It makes sense for Daniel, but he is more focused on organizing work. So he usually says: “if you're gonna create some taxonomy, if you're gonna map skills, if you're gonna try to understand and even plan some Learning & Development, you have to decide what skills you want to map to develop people and what skills you want to map to organize work.?

That means it's like those two that I see. I haven't come up with anything else if you now want to simplify the world. But there are no perfect answers I would say.

"To simply the world of skills, you have to decide what skills you want to map to develop people and what skills you want to map to organize work"

Different perspectives for Skills-Based Organizations

How should companies orchestrate multiple skills programs or initiatives within HR, IT, R&D, Manufacturing, etc.? According to Daisuke Nishimura of Macnica and Zipteam, there are different approaches to building skills-based organizations, and how different parts of the company may have different needs for skills data.?

He mentions the importance of leveraging skills data for workforce planning, as well as creating skills programs for different parts of the business, such as HR, R&D, and manufacturing.?

As we move towards building skills-based organizations, there are different perspectives to consider:?

1. On the one hand, the company may aspire to become an SBO from a leadership perspective.
2. On the other hand, HR may need to manage skills organization-wide, including learning programs and internal talent marketplaces.

Meanwhile, there is also the aspect of leveraging skills data for workforce planning and project management.?

For example, some customers are interested in using skills data to build teams and allocate resources to projects, but this is a new field and not many have experience with it. In some cases, different parts of the business may require different levels of granularity when it comes to skills data.

For instance, HR may need high-level skills information, while R&D may require more detailed skills data. To address this, some companies have implemented multiple skills programs, tailored to different parts of the business.?

For example, one pharmaceutical company we talked to had both an HR-level skills program and a more granular skills program for R&D. In addition, there are skills initiatives for manufacturing. Coordinating all these different skills programs within a company can be challenging.

Orchestrate multiple skills and initiatives?

Daniel has a similar problem. He mentioned working for a shipping company launching a skills taxonomy, which is a complex task. For this specific company we proposed a solution, which involves categorizing skills into essential human skills (for example problem solving, adaptability, etc.), global skills (for example project management, etc.), and department-specific skills (for example R&D, HR, L&D, etc.).?

Employees are asked to select three core skills from these categories. Daniel acknowledges that the system is not perfect, but it provides guidance on where employees can go and what skills they need.

One important point Daniel makes is that if a skill is needed in multiple departments, it should be listed under global skills. But if it is specific to a department, it should be listed under the department's sub-category. In this way you can consolidate and simplify an unbelievable choice when there are about 700 different skills to guide them.

How to deal with the skill 'analytics'? While it can be categorized as a global skill, there are specific departments like sales and commercial that require a more specialized type of analytics. Therefore, we added a sub-category for Sales Analytics, which represents this specific skill set. Although this may result in some duplication, it helps guide employees more effectively in choosing the right skill category.

"There is no one formule right, you're always sacrificing something" - Fedor Hagenaar

The way you describe it, is called job family models with labels and a double matrix on top of that. These are trade-offs between being specific and generic when defining job roles within an organization.?

Either the generic part by making it very specific and then you end up with maybe 4,000 rules within your organization, which makes it really hard to increase mobility. Or you sacrifice basically the other way around the level of details.

Fedor knows companies that went back to maybe from 4,000 to 40 job roles. That does improve mobility because people can travel even more easily within the company but people don't know what to do because the job description isn't specific enough.

So, I guess there's not a perfect way of doing it. It depends on the company and on the specific context. I think you should probably accept that, because any model will have its limitations and won't be a perfect fit for every situation.

What’s keeping organizations from making the transition to a SBO?

According to research among many workers, executives, and HR leaders across industries and around the world, there are 3 main barriers to transform into a skills-based organization.

The established mindsets and structures with the inability to move skills to business priorities are the top 3 obstacles for building tomorrow’s skills-based organization. At least these questions need to be answered.

1. How do you prioritize the skills your organization needs based on business objectives, and what processes do you have in place to allocate resources accordingly??
2. What role do managers and other stakeholders play in managing skills-based practices, and how do you ensure that they are equipped to do so effectively?
3. What frameworks and tools do leaders need to embrace for their businesses to successfully shift to a skills-based approach?

Fedor recognizes the importance of the fist question and experiences sometimes the difficulty of convincing businesses to undertake a large-scale transformation related to learning and skills development. Many learning leaders and HR directors lack the power to make such a transformation happen, and that convincing the business requires framing the issue in terms of problems that directly impact the business. He suggests that using language such as "talent" and "critical capabilities" may be more effective in getting the attention of business leaders than simply talking about "learning."?

Overall, it’s about emphasizing the challenges of driving change in a complex organization and the importance of framing the issue in a way that resonates with key stakeholders.

Jan-Willem Nieuwenhuys talked to a mid-corporate organization that's got 160% of work instead of the people. They can't find people so they really need to dive into the company to look for the right skills. That would be extremely valuable for them.

"It helps by framing the skills project in terms of increasing productivity or improving workforce abilities, rather than talking about learning"

Daniel explains the importance of having a powerful individual to drive a big transformation project, specifically in the context of consulting with HR. Leaders within the organization who manage a large number of people may be more receptive to the project and that it's important to convince everyone inside the organization that it's a good idea. It helps by framing the project in terms of increasing productivity or improving workforce abilities might be more effective than talking too much about "learning."?

The first and second question are connected, as managers play a role in supporting to develop employees what Jan-Willem calls "skill dialogues," which he believes are crucial in teams as part of a successful transformation.

While individuals are responsible for their own career development, it's up to managers to create a good environment and provide the necessary support through 1:1 meetings to help individuals develop and grow."

6S Skills Validation Framework

Although the skills conversation is not about perfect measurement, but about development and focus on the most important skills, we briefly discussed that skills validation is a critical element of the transformation towards a skills-based organization. Therefore we use the 6S Skills Validation Framework, to give direction to the organization with implementing skills management.

It ensures that employees' skills are validated, assessed and evaluated in a structured way, and that the organization can effectively identify skill gaps and provide targeted learning and development opportunities.

• Structured limited List of generic Skills related to company strategy & role
• Single and standardized rating scheme - defined rating criteria
• Standardized skills validation – Organization Authored Assessment Curated (methodology and process)
• Self-Assessment skills learnt after training and on the job, projects
• Supervisor 360 Assessment periodically Skills Dialogs in team meetings and 1-1 validate self-assessment
• Simplicity for system and easy to understand user-friendly process for employees

"In general people come to work to work, not to learn...so why should anyone cares about skills"

Organizations need to focus on engaging employees to develop skills related to their daily work by providing them with a solid and easy-to-use framework for validating their skills. This framework enables value-driven and outcome-based decisions and facilitates "growskilling," allowing employees to develop their skills with guidance."

By focusing on developing the employee's skills and goals, therefore making use of a user-friendly skills management system and process, organizations can enhance their employees' skills and drive business success.

Skills data fuels the transformation

In the end it’s all about the data, getting insights for value-driven and outcome based decision making. Also for skills insights. Therefore, we need to drill down the roles and capabilities and identify all the necessary steps to analyze it.?

According to Deloitte's research Building tomorrow’s skills-based organization, 79% of people are open to sharing their data of capabilities and skills. However, some people may be hesitant due to privacy concerns, especially with soft skills. Technical skills are generally easier to share.?

Fueling the transformation brings us to the following two questions to understand:

1. What strategies have you found to be effective in encouraging employees to regularly update their skills data, and how do you ensure that employees understand the value of doing so?
2. How do you balance the need for skills data with concerns around employee privacy and data security, and what steps do you take to ensure that skills data is being used in an ethical and responsible manner?

“79% of workers say they are completely open to having demonstrated capabilities and skills data on them”

It's interesting to consider that core HR platforms like Workday and Oracle have had skills fields for years, but often people ignored them. Now, with the emergence of talent marketplaces, individuals have more incentive to input their skills data, as doing so can lead to relevant suggestions such as finding a mentor, a project, a full-time role, or a career path. However, the motivation to update skills data can be short-lived if individuals lack drive or aren't encouraged by their leaders.?

To make skills validation a norm, we need passionate leaders who model the behavior and share success stories. It's also crucial to integrate the platform into the employee life cycle, making it a continuous go-to for employees as they join, get promoted, or look for new roles.

Real change management is essential to make this happen, and leaders' support is crucial to achieve it.?

Every leader understands the importance of employees' learning and upskilling, but it can be difficult to motivate employees to engage in learning unless there is a clear link to their work. Strategies such as generating skills data in the system can help when learning and upskilling is linked to promotions, incentives, and mandatory learnings.?

However, there is not a one-size-fits-all way of doing it."

Starting with skills? Start with the 4S model

Depending on the size and type of your organization, starting with skills management can be a daunting task. If you want to save costs on learning, improve productivity, realize organizational goals and engage, develop and retain talent, the best thing is to start as soon as possible with executing skills.

Think about these points of the 4S model, when starting with skills.

• Scaled-down -> Start small and focus on a few key skills that are most critical for success. This will help to simplify the process and avoid overwhelming employees
• Streamlined -> Keep the skills management process simple and straightforward. Use technology and automation where possible to reduce administrative burden and make it easier for employees to engage.
• Strategic -> Identify somewhere to focus skills development efforts by aligning them with the organization's strategic priorities and business goals. This will help to ensure that skills development efforts have a meaningful impact on the business.
• Sooner rather than later -> Start the skills management process soon and make it a regular part of the organization's operations.

The sooner you start, the sooner you can begin to see the benefits of a more skilled and capable workforce.

Would you like to discuss how to develop and implement a skills strategy or start with skills management reach-out me here. Let’s accelerate your transition into a skills-based organization.

Jan-Willem Nieuwenhuys is Managing Partner of Digital Skilled Professionals (dsp) and is a trusted advisor in the field of skills management to make organizations future-ready.?

Jan-Willem is also host of the Learning & Skills Management podcast ??

Work changes quickly. Learning and transforming is a challenge for organizations. In these podcasts, we have conversations with learning leaders, professionals, and solution providers who have applied successful methods to transform a business environment.?

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