How to build a skills-based organization

The future of work revolves around skills. More companies are adopting skills-based approaches in their operations, from skills-based hiring and talent development to upskilling and reskilling L&D programs. For employees, skills are creeping up to degrees as the main credential indicator.

However, becoming a skills-based organization doesn’t happen overnight. It involves completely rethinking how companies see their employees, shifting away from seeing workers as just their job titles. Instead, a skills-based approach recognizes each individual as a unique combination of skills that can be applied to tasks that match their profile.

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What are the benefits of a skills-based organization?

1. HR teams can identify and allocate talent more efficiently.

Focusing on skills uncovers hidden talent: people who may not have standout qualifications, but have all the skills needed to excel in a role. Furthermore, since employees aren’t confined to single job roles anymore, skills-based based organizations often have fewer silos and are highly collaborative.

2. Employees take more initiative in their careers.

The specific requirements for someone to assume a job role are clearly defined. This provides a more straightforward path for employees to advance their careers. This fosters a culture of career clarity and opportunity — key contributors to employee wellbeing.

2. Companies navigate change more effectively.

Since it’s easier to find the right talent for each job role, organizations can swiftly reallocate resources in response to shifting market demands, making them more resilient to industry changes.

The approach is efficient and fluid, and the benefits are diverse. But, implementing a skills approach takes time and deliberate planning. How do companies start? There’s no simple roadmap to a skills-based organization, but here’s a blueprint guide for you to follow.

4 key steps for skills-based organization

Step 1: Assess your current workforce and skills.

First, you’ll need to collect data on the state of skills in your organization. This involves a skills assessment across your workforce.

• Identify existing skills. Start by mapping out job roles and their relevant skills. Talk to managers, team leaders, and employees to determine the skill requirements for each job description.
• Assess skill levels. Where do your employees currently stand? Create a rating scale (e.g., beginner, intermediate, etc.) to evaluate proficiency levels. Consider self-, peer-, or managerial assessments for each skill.
• Forecast future skills. Look at industry trends, emerging technologies, and market demands. Consider consulting with external industry experts. What skills weren’t in your initial identification but may become important for your organization in the future?

The data you collect in this stage lays the groundwork for identifying gaps and creating learning paths.

Step 2: Organize your data into a framework.

Once you’ve gathered detailed insights into your workforce’s job roles, relevant skills, and skill levels, it’s time to organize that information in a way that’s accessible and actionable. This is where frameworks come into play.

• Create a skills taxonomy or skills ontology. Taxonomies are hierarchical classification systems that organize skills into categories and subcategories, making it easy to understand proficiency levels. Ontologies, on the other hand, are organized more like a web, emphasizing the relationships and dependencies between each skill.
• Make it accessible. Consider integrating your framework into your HR systems or other internal portals. The goal is to provide a clear view of the skills landscape within your organization, so that everyone can see where they stand and where they can grow.

Instead of expressing job roles with vague titles, you’ll now be able to express them as an amalgamation of the skills required for that role.

Step 3: Kickstart L&D programs.

By laying out your data on job roles, relevant skills, and skill levels, you should have a direction for which skills your company will want to focus on developing.

• Build a content marketplace. Where will you source the courses and learning materials for employees to use? Whether you provide pre-made learning content from external learning providers, or create in-house content through the talent you already have — organize your content into a centralized content marketplace.
• Close skills gaps. Identify the disparities in your skills framework. Where are the most pressing gaps you can address? What’s the specific content that can close those gaps?
• Advance existing skills. This takes a more long-run approach. There may be skill alignments right now, but which skills are set to become more demanding in the future? Where are some areas where employees can grow from intermediate to expert levels?
• Incorporate AI for automated, personalized learning. Each employee deserves a learning path tailored to not only their job roles but also their interests. This is where AI can help. Leverage technology that curates content based on individual skill profiles.

Noticing and closing these small gaps throughout your organization can raise your organization to its maximum performance.

Step 4: Review and prepare for the future.

In the first three steps, the focus was on mapping and addressing the relationships between job roles, job skills, and skill levels. The truth is, those relationships are dynamic. As your industry changes, so will the skills required to stay competitive.

• Make skill reviews regular. Continuously update your skills taxonomy. Ensure that managers are conducting regular reviews with employees to keep their skills aligned with job demands.
• Always consider where your industry is headed. Keep an eye on emerging trends and proactively develop the skills that will become critical in the future.
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Becoming a skills-based organization isn’t a one-time transition. Rather, it’s a continuing transformation that ensures your organization remains agile and resilient to industry changes.

Final thoughts

A skills-based transformation isn’t linear — but these four steps form the basis of your transformation. It’ll take some time to collect your company’s skill data, as well as some trial-and-error to see which frameworks or L&D programs fit your organization the best. Being a skills-based organization also means constant reassessing: monitoring which skills become less or more important as market demands shift.

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