Why People Analytics is Essential for Creating a Skills-Based Organization

This post originally appeared on the Crunchr blog.

In today's fast-evolving business landscape, traditional approaches to workforce management are rapidly becoming obsolete.

The shift towards skills-based organizations (SBOs) redefines how companies operate, emphasizing the importance of aligning employee skills with organizational goals. At the heart of this transformation is people analytics, a powerful tool in the CHROs' toolbelt that enables HR professionals to make data-driven decisions while ensuring their workforce is fit for the future.

Before making this transition, we must first understand the basics of skills-based organizations by establishing standard definitions.

Understanding Skills-Based Organizations (SBOs)

A skills-based organization prioritizes identifying, developing, and utilizing employee skills to drive business success. Unlike traditional models that focus on job titles and roles, skills-based organizations build strategies around a comprehensive understanding of the skills within their workforce.

Skills Taxonomy is the structured classification of skills within an organization. It provides a clear framework for identifying and categorizing employee capabilities.

Skills Inventory Assessment involves:

• Evaluating employees' skills.
• Helping organizations understand their strengths.
• Identifying gaps that need to be addressed.

Skills Gaps refer to the difference between the skills employers need or desire and the actual skills employees possess. They highlight areas where employees' current skill sets could be improved to perform their roles effectively or meet the organization's objectives. Skills gaps can assist in identifying which roles require external hires vs. being filled with internal mobility.

Skills Taxonomy is a structured classification system that organizes skills into categories and hierarchies.

Skills Ontology is a comprehensive framework that defines the relationships and interconnections between various skills.

This whole idea of redefining the workplace with skills is still in its infancy, but the energy and enthusiasm for skills in today's market are palpable. In fact, according to Mercer's 2024 Global Talent Trends report, 38% of business leaders in the U.S. consider building talent processes around skills one of their top priorities.

So, how can people analytics help?

The Role of People Analytics

People analytics provides the data-driven insights needed to transition to a skills-based organization. By leveraging data, HR professionals can gain deep insights into their workforce's skills landscape, enabling them to make informed decisions about hiring, development, and retention.

38% of business leaders in the U.S. consider building talent processes around skills one of their top priorities. – Mercer, 2024 Global Talent Trends

For instance, a leading tech company used people analytics to transition into a skills-based organization. By analyzing their employees' skills data, they identified critical gaps and implemented targeted training programs. This approach helped to improve productivity, boost employee engagement, and increase retention.

Organizing Workforce Data and Skills Data

One way people analytics assists organizations in making skills-based decisions is through streamlined data collection and organization.

People analytics creates a data infrastructure essential for skills management by cleaning, standardizing, and organizing data from various HR systems into a coherent data model.

From there, you can infer skills through various methods, such as employee self-assessments, manager evaluations, consultant analysis, and AI-driven technology. At this stage, a structured skills taxonomy or ontology is necessary to categorize and understand skills within the organization.

Benefits of Integrating People Analytics

Integrating people analytics into skills-based organizations offers numerous benefits:

1. Identifying and Closing Skills Gaps: People analytics helps pinpoint deficiencies in organizational skills. By understanding these gaps, HR can develop targeted training and development programs to bridge them, ensuring the workforce is well-prepared to meet future challenges.
2. Connecting Skills Data to the Employee Lifecycle: People analytics allows organizations to connect skills data to various stages of the employee lifecycle, from hiring and onboarding to performance management and career development. This holistic approach ensures the effective use of skills data to enhance employee experience and organizational performance.
3. Making Informed, Skills-Based Decisions: With accurate skills data, HR professionals can make strategic decisions that align with organizational goals. Whether it's hiring new talent, promoting employees, or designing training programs, people analytics provides the insights needed to drive success.

The shift towards a skills-based approach is not just a trend but a necessity in today's competitive environment. It allows companies to be more agile, responsive, and innovative, improving performance and employee satisfaction.

This evolution becomes increasingly critical as organizations strive to remain competitive in a rapidly changing world. People analytics is the cornerstone of this transformation, providing the data-driven insights needed to identify skills gaps, make informed decisions, and drive organizational success.

Ready to transform your organization into a skills-based powerhouse? Learn more about how to identify and close skills gaps and how Crunchr can help today. ??????