In 2023, a PwC report revealed that many companies still prioritize formal qualifications and job histories over skills. This practice limits their ability to fully leverage their workforce’s potential. The report noted: “A survey reveals that 35% of employees believe their skills aren’t reflected in their qualifications or job histories, and 27% feel employers focus too much on past job experiences rather than skills.” By shifting focus to skills, organizations can unlock untapped potential, ensuring their teams are equipped to face challenges, contribute effectively, and drive sustainable growth in a dynamic economic landscape.
What is a Skills-Based Organisation?
Deloitte defines a skills-based organisation (SBO) as a “new organizational form” that places skills and human capabilities at the core of talent strategies, shaping a new model for work and workforce management. In an SBO, the focus is not on job titles but on the skills required to accomplish tasks. Work is organized in two main ways:
- Deconstructing Roles: Traditional roles are divided into smaller parts (tasks, projects, gigs, etc.) based on the skills and competencies needed.
- Broadening Work: A specific focus is placed on achieving outcomes, solving problems, or delivering value beyond predefined job roles.
Historically, people were identified by their job titles. In contrast, the skills-based approach emphasizes the individual’s unique abilities and talents, allowing for a more flexible application of skills across tasks aligned with organizational goals.
Benefits of a Skills-Based Organisation
According to a Deloitte survey, 8 out of 10 employees and leaders agree that jobs are not the best way to organize work, and 98% of executives say they aim to become more skills-based. This shift offers numerous advantages:
- Increased Resilience: In a constantly changing business environment, skill demands evolve rapidly. A skills-based organization can quickly adapt, reallocating talent to meet shifting needs. This flexibility results in greater agility, adaptability, and resilience.
- Access to a Larger Talent Pool: Skills-based hiring focuses on what individuals can do rather than their past qualifications. This opens up a broader and more diverse talent pool, allowing organizations to meet workforce needs while promoting creativity and innovation.
- Improved Employee Retention: Empowering employees to leverage their skills across various functions creates opportunities for meaningful work and internal mobility. This enhances job satisfaction, contributing to higher engagement and retention.
- Enhanced Performance and Productivity: Engaged employees contribute more to organizational success. When workers take pride in their skills and align their goals with the organization’s, productivity, innovation, and performance increase.
5 Steps to Build a Skills-Based Organisation
Transitioning to an SBO involves a strategic shift in talent management. While the process requires time and commitment, these five steps can guide organizations toward fully realizing the benefits of a skills-first approach.
1. Build a Roadmap
Start by educating the organization on the importance of prioritizing skills. Create a common language around skills that everyone understands, and ensure accurate, up-to-date data is accessible to all stakeholders. Address the following key questions:
- What skills are needed for different roles?
- What skills does the organization currently possess, and which are lacking?
- What skills are critical for future growth?
- What market trends and competitor skill sets should be considered?
By answering these questions, you can develop a solid foundation and clear roadmap for becoming an SBO.
2. Deconstruct Jobs into Tasks and Projects
To transition to a skills-based structure, organizations must first break down traditional job roles into specific tasks and projects defined by the skills they require. For instance, instead of a generic job title like “business analyst,” specify the required skills such as data mining or database management. This shift enables more accurate recruitment and role alignment.
3. Map Your Organisation’s Skills
A key element in becoming an SBO is skills mapping. By creating a visual skills matrix or taxonomy, organizations can catalogue existing skills, identify gaps, and track employee proficiencies. This step is critical for determining where upskilling or new talent acquisition is needed. Additionally, a skills gap analysis helps to anticipate future needs and devise strategies to fill those gaps.
4. Put Skills First in All Processes
From recruitment to performance monitoring, adopting a skills-first approach across all processes is essential. Focus on hiring people for their problem-solving capabilities rather than qualifications. Since skills constantly evolve, it’s crucial to reskill and upskill regularly to maintain core competencies.
5. Review and Realign
Continuously evaluate the effectiveness of the skills-based strategy. Regular reviews and adjustments ensure the organization remains aligned with its goals. If certain initiatives aren’t working, experiment with different approaches until optimal results are achieved.
Conclusion
The shift to a skills-based organization is an ongoing process that unfolds in five strategic steps. As businesses increasingly recognize the importance of skills in today’s competitive environment, they must adopt this forward-thinking model to unlock individual potential, boost performance, and adapt to the ever-evolving world of work. By fostering an environment where skills take precedence, organizations can enhance resilience, build stronger talent pools, retain top employees, and achieve greater success in the future.
