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A 4-Step Guide to Becoming a Skills-Based Organization
HR is moving quickly toward skills. Many companies now apply a skills-based approach across their operations, from skills-based hiring and talent development to upskilling, reskilling, and L&D programs. But shifting the focus from degrees, experience, and competencies to skills first requires a change in mindset: seeing each employee as a unique combination of skills.
Why are companies breaking with established practice to become skills-based organizations? Below, we cover the benefits of a skills-based organization and a four-step guide to making the shift.
If you’d like a primer on skills-based HR before you start, see this article.
Building Skills-Based HR with AI: Skills vs Competencies
Benefits of a Skills-Based Organization
1. You Can Uncover New Talent and Deploy It More Effectively
Focusing on skills surfaces talent that used to go unnoticed. Employees who have the skills a role needs can take it on even without directly related experience. And because people are no longer locked into a single role, barriers between departments come down and collaboration picks up.
2. Employees Can Take Charge of Their Careers
When the skills and requirements for each role are clearly defined, employees can plan their career development with far more clarity. That creates real opportunities for growth and has a positive effect on job satisfaction.
3. You Can Respond to Market Shifts More Flexibly
In a skills-based organization, when the market shifts you can quickly find the right people internally and redeploy them fast. That lets the company respond to a changing environment with more flexibility and better results.
A skills-based transformation brings real advantages, including efficiency and flexibility. But it takes significant resources and a concrete plan. The four steps below walk through the process.
A 4-Step Guide to Getting Started as a Skills-Based Organization
Step 1: Assess and Analyze Current Skills
Start by collecting data on the state of skills across the organization, including an assessment of every employee’s current skills. This data becomes the basis for identifying gaps between the skills each role requires and the skills people have today, and for designing learning paths.
- Identify the skills each role requires
Begin by mapping the skills each role needs. Talk with everyone, from senior leaders and managers to team members, to confirm and document the skill requirements for each role. - Assess current skill levels
Assess how proficient employees are in the skills they have. Create a rating scale such as beginner, intermediate, and advanced, and confirm skill levels through self-assessment, peer review, and manager assessment. - Forecast future skill needs
Analyze industry shifts, emerging technologies, and market demand to predict which skills will be essential for your organization. Bring in outside experts if needed. Identify skills you don’t have in-house today but will need going forward.
Step 2: Build a Skills Data Framework
Once the data gives you a detailed picture of employees’ roles, skills, and skill levels, it’s time to build a framework. This lets you see each role in a new light: as a combination of skills.
- Skills taxonomy vs. skills ontology
A skills taxonomy is a framework that sorts skills into parent categories and subcategories to make proficiency easier to understand, with several skills nested under each top-level skill. An ontology, by contrast, is a network-style framework that shows the relationships and dependencies between skill groups. Choose the framework that fits your organization’s characteristics and goals. - Share the framework
Publish the finished framework in your HR system or internal portal. What matters is that every employee can easily see their current skill level and where they can grow.
Step 3: Design and Run L&D Programs
In this step, you use the data and framework to choose the skills the organization will focus on developing, then put that plan into action. The goal is to find and close skill gaps across the organization and improve performance.
- Build a learning content marketplace and library
Content can come from external partners or be produced in-house. Bring everything you source into one place and build a library where employees can easily find what they need. - Close skill gaps
Prioritize the areas where the gap between required skills and employees’ current skills is widest, then plan the content and training programs needed to close them. - Develop and grow existing skills
Even when employees’ skills match their current roles well, those roles may demand higher skill levels over time. Identify the skills where people can level up and build long-term development plans. - Use AI to personalize learning
Offer every employee learning paths based on their role and interests. AI makes it much easier to deliver personalized learning matched to each employee’s skill profile.
Step 4: Review Skills and Prepare for Change
The first three steps covered mapping skills to roles, identifying skill levels, and closing skill gaps. After ongoing learning and development, you also need to check how well your skills line up with what the market demands. Because industries and markets keep changing, staying competitive means identifying new skills and the gaps between them and the skills you already have.
- Review skills regularly
Keep your skills taxonomy up to date, and have leaders and employees review it on a regular schedule. This is an ongoing process of checking and aligning the skills each role requires with employees’ current skills and proficiency. - Prepare skills for a changing market
Keep a close eye on market and industry shifts, and build the skills that will matter in the future inside the organization before you need them.
A Living System, Not a One-Time Project
Skills-based transformations struggle when they are treated as one-time build projects. Reviewing skills regularly as the market changes and preparing for the future is not a one-off project. It belongs to the realm of ongoing operations.
When two things are tightly connected, continuously defining the changing criteria for success and objectively measuring where the organization stands today, a skills framework stops being a report for show and becomes a living system that drives the organization’s growth.
Reviewer’s Comment
Of the four steps, the one that most often stalls in practice is the current skill-level assessment in Step 1. Self-assessments tend to overstate proficiency, and even when senior leaders do the rating, a simple Likert scale (strongly disagree, neutral, strongly agree) leaves each rater reading it differently, so the results are hard to use as they are. That’s why assessments should be designed to measure observable behavior in work situations and to capture supporting evidence. Only when the assessment is reliable will the framework and training design from Step 2 onward hold up.
— Dr. Soyoung Jeon · CEO, Telta
Related Reading
- Skills-Based HR Success Stories: Mastercard, Blizzard, and Sephora
- AI-Era Talent Strategy: Filling the Skills Data Gap in Your HCM and HRIS
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