Why Your Organization Should Consider Becoming a Skills-Driven Organization (SDO)
Jan-Willem Nieuwenhuys
Chief Skills Officer | HR Tech Building Skills-First Organizations | Creating Value out of Skills ?? Connecting Human & AI | Skills Coach??
(And Why It Might Not Be Ready)
Almost every organization is in some stage of a digital transformation, where automation is reshaping industries at breakneck speed. Organizations are searching for new ways to stay competitive.
Enter the Skills-Driven Organization (SDO) – a revolutionary approach that's transforming how companies manage, develop, and deploy talent. But before jumping on this trending bandwagon, leaders need to understand both the tremendous potential and significant challenges of this transformation.
What is a Skills-Driven Organization?
At its core, an SDO prioritizes skills over traditional job titles and rigid organizational structures. Instead of focusing on fixed roles and hierarchical career paths, SDOs build dynamic frameworks centered around capabilities and potential. Skills become the universal language driving decisions across recruitment, development, and internal mobility.
The Promise of Going Skills-Driven
The benefits of becoming an SDO are compelling:
The Reality Check: It's Not for Everyone
However, as revealed in recent research by The Conference Board, becoming an SDO isn't universally beneficial. Before embarking on this journey, organizations should consider several critical factors:
Lessons from the Pioneers
Companies like Ericsson have blazed the trail in becoming SDOs, offering valuable insights for others considering the journey:
The Skills-Driven Journey Can Take Several Years, So It Is Essential to Proceed Carefully and Keep It Simple
Once an organization has committed to becoming skills driven, it is important to communicate a compelling case for change that will resonate with all stakeholders, including leaders, managers, and employees. Ericsson, for example, took an innovative approach when starting its skills journey by highlighting external trends and relating these to internal pain points (Figure 1).
Next, Ericsson recognized that this was not about revolution but evolving its existing job architecture to bring skills into the heart of jobs. The program to deliver the necessary ecosystem for jobs and skills was based on delivering an architecture that was simple, dynamic, and automated.
From day one, the emphasis was on delivering value for managers and employees.
This meant that once the infrastructure was created, skills needed to be brought into as many people activities as possible. Ericsson started its journey with learning, recruitment, and talent mobility.
As progress was made, keeping the language simple and emphasizing the potential benefits have been key to helping managers and employees appreciate the improved experience (Figure 2).
Communicate benefits and impact in simple language
Automation Is Needed to Reduce the Administrative Burden
Advances in application programming interfaces (APIs) between systems enable organizations to have one language of skills across all systems and platforms. Yet the journey represents a profound change for those used to employing job descriptions, formal credentials, and broad competencies to direct hiring, assignments, learning, and promotions. Thus, organizations should address underlying process and behavior change before deploying technology in becoming an SDO.
Ericsson, for example, focused first on building a business case, and subsequently ran pilots and prototypes to address specific talent management pain points. It used these experiments to learn, and to convince leaders, managers, and employees of the benefits of becoming an SDO. Only after making the business case, running successful pilots, and building the infrastructure was Ericsson ready to officially launch its skills-driven initiative. At this stage, automation became essential.
The advanced algorithms and AI used to drive precision hiring, internal talent marketplaces, and personalized learning require the granular data provided by skills, which, according to Ericsson, become the “language” of HCM (Figure 3).
Skills are the "language" of the employee experience
Today, the language of skills runs throughout Ericsson’s human capital systems. The company has found that skills data inform career mobility, hiring, learning, and workforce analytics. Ericsson’s skills-based approach has also fueled a talent marketplace platform for internal mobility, and its enhanced LXP has personalized learning for each employee.
Others have followed a similar path, starting with the business case and communications, and then with the deployment of technology to realize a skills-driven vision. Customized skill assessments allow workers to self-assess their proficiencies, enabling the curation of specific learning content from an LXP to address individual learning needs. This also gives managers valuable information concerning their teams’ skills and developmental needs.
SDO pioneers have learned that persuading employees to create and update a skills profile poses a difficult challenge, in part because it is a process outside the normal flow of work. Technology, including
AI, can help make the creation and maintenance of skills profiles more dynamic by automating the flow of skills to employee profiles based on worker achievements and learning, and by nudging workers with suggested updates to their profile.
Organizations considering the skills-driven journey should note that workforce skills data are consolidated internally to drive the algorithms and platforms of skills-driven HCM. It is impossible to take advantage of skills-driven technologies without good data.
The Path Forward
Becoming a skills-driven organization enhances organizational agility and precision in HCM, yet requires leader buy-in and cultural adaptation to new work and perspectives. The transition is complex and best suited for organizations ready to align their talent with business priorities and adopt data- and tech-driven approaches.
For organizations ready to embrace the skills-driven future, success lies in careful planning and realistic expectations. The transformation requires:
The Bottom Line
Becoming a Skills-Driven Organization represents a fundamental shift in how we think about talent and work. While not every organization needs to make this transition immediately, those that do it successfully will likely find themselves better equipped to navigate the rapidly evolving future of work.
The question isn't whether skills will become increasingly important – they will. The question is whether your organization is ready for the journey of becoming truly skills-driven.
What's your take on Skills-Driven Organizations? Has your company started this journey?
Share your experiences in the comments below.
Jan-Willem Nieuwenhuys is Chief Skills Officer of Digital Skilled Professionals and a trusted advisor in the field of skills-first organizations. Independent strategic advise and project management support for learning and skills management solutions.
Solve productivity and engagement issues to organise work, projects & people around skills.
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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.
Source and credits to the authors of: The Long but Rewarding Journey to Becoming a Skills-Driven Organization - The Conference Board.org
Talent & workforce expert - strategy, leadership, operating model, technology, experience | Skills & Skills-based organisations researcher | Writer | Speaker | Founder & CEO, TQSolutions
4 个月Jan-Willem Nieuwenhuys - what a great piece, thank you for sharing. It reads like something my business would write about #skills to its clients. We are very aligned in our thinking around pragmatism towards skills, and culture over tech. We too think 'skills is not for everyone' and that 'some may not be ready for skills' - working through this is difficult but crucial. We should compare notes one day !