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The term "skills-based organization" is currently a trending topic. Since it is a relatively new term, there is a lot of confusion about what it means. Deloitte defines it as a new form of organization that "places skills and human capabilities at the center of talent strategies, creating a new operating model for work and the workforce."
Skills-based organizations not only manage talent differently, but also organize their work with a new focus. Instead of using jobs as the predominant way of organizing work, these organizations are dividing traditional roles into projects and tasks according to their skills, allowing for greater agility and internal mobility.
In this blog you’ll learn why companies are implementing skills-based organizational strategies. Plus, you will discover three common pitfalls to avoid when introducing skills-based strategies.
A perfect storm has erupted in 2022’s labor market, caused by three major agents of change.
First, changing demographics and rapid globalization increased competition. Then the pandemic hit and prompted many people to reassess their life priorities, leading to a higher than average number of resignations.
The third agent of change is reskilling. This is not a temporary or unexpected event. Every company needs a continuous reskilling programme to enable workers to meet the changing demands of their jobs. Many of the new skills needed are driven by digitization - but these skills change and evolve at a much more rapid pace than other skills. This means that they expire faster and they need almost constant review.
Right now, less than a third of companies have already made the transition from recruiting and developing people for jobs, to a skills focused organization. However, to meet today's and tomorrow's workforce challenges, companies must transform into skills-based organizations.
Sounds daunting? It doesn’t need to be. There’s plenty that organizations can do to get ahead of workforce trends before they impact the market. And what is the role of skill insights in helping them to achieve this? We decided to find out.
We collected and analyzed data from more than 500.000 job adverts. Primarily, we focused on modern, tech-focused and tech-adjacent occupations. These include roles such as software engineering, product management, account management & sales, data science & engineering, marketing and recruitment.
We extracted the listed skills from the job adverts and matched them with our own skill taxonomy. Then, we calculated how frequently both soft and digital skills were mentioned in the job postings.
Our resulting report, Transitioning from Jobs to Skills, found three trends in the current job market:
Our research found that the growth of digital skills is no longer limited to technology roles. Most roles now demand technical fluency and capability. The skills now required in non-digital roles include data analysis, reporting, analytics and software development. These roles also expect a good working knowledge of tools.
For some workers, this is a change in mindset, not just skills. Many will have joined the workforce at a time when technology was the responsibility of a specific department. It’s vital that these employees understand why it’s important for them to continually update their technology skills. It may have been a struggle for them to acquire these skills in the first place, so make sure they have adequate support and listen to their feedback on any mistakes during previous upskilling efforts.
Carrying every employee with you in the quest for skill transformation can be a challenge. Keeping ahead in your sector or market means that you must constantly evolve your strategy and the specific initiatives and technology you use. However, for new products to be successful, every employee must be able to use them and articulate their benefits to your customers.
If you invest in new technology, whether for customer facing products or business processes, it must always be in tandem with support for your workforce.
So, on the flip side, we also need to ensure that our digital experts are able to lead and manage teams. In the past this has been less of a prerequisite and more of a ‘nice to have’ attribute. But now that technology is no longer an island, its experts need to acquire the same managerial and leadership skills as other departments.
Another driver is the rise of hybrid working, requiring closer team working, better planning and wellbeing support. The new work model also brings greater responsibility for employees’ mental health, so managers must exhibit greater intuition and emotional intelligence. Communication is obviously paramount but so is organizational skill and the agility to respond to a crisis or opportunity.
Our research found that, overall, purely technical roles are becoming extinct. We predict that this trend will continue and escalate further in the coming years.
As the workforce adjusts to skill based learning and previous professional boundaries melt away, those who already possess cross-functional skills are best placed to manage collaboration and support the skills revolution.
Demand is rising for candidates with experience in roles such as Agile Coach, Product Owners, Data Translators or Project Managers. These people are already proficient in agile working and have probably always worked cross-functionally. Acting as the liaison point between multiple departments and teams within an organization is second nature. They’re also well placed to advise on whether skill gaps exist in other teams.
It's a logical progression that these are the people who should assist you with skill transformation projects at a planning level. Recognize that they are some of your greatest assets.
As jobs evolve and teams move closer, compartmentalizing tasks into individual job descriptions is outdated and inefficient. It’s easy to see why the habit is hard to break: jobs have informed the way we assign work and carry out general HR activity for decades. We give feedback, hire, promote, and organize teams around colleagues with specific roles and skill sets.
If the last few years have taught us anything, it’s that we need to get ahead of change before it overwhelms us. Skills agility will become increasingly important for organizations that want to future-proof their workforce. Now is the time to respond to changes in the economy and business environment that we already know about, and consolidate in preparation for what comes next.
Can you afford not to make the transition and work smarter? It’s time to act.
To successfully transform your company into a skills-based organization, start by answering three strategic questions:
For a skill-transformation to succeed you need to be able to identify and define measurable goals. But unfortunately, still most companies are flying “data blind” with regard to the skills they need for transformation as identified in a 2020 survey from Gartner. In fact, 53% of respondents told a Gartner survey that the biggest impediment to a smooth transformation to a digital workforce was the inability of companies to accurately identify the skills they need. The only way to bring structure to skills and define measurable goals is by using a skills taxonomy. A skills taxonomy is the foundation supporting all skills development. This structure forms the backbone of your workforce development activities and can serve as your skills map. It guides individual learners but can also steer your whole organization. From there, it's easy to define destinations and set agile, measurable learning goals for target skill personas.
We have our map (skill taxonomy) and we know our destination (skill profile). What's missing is our starting point - an accurate assessment of our current skill level.
The problem with most learning solutions is that they wrongly assume the same starting point for every single learner, but as we know: every learner is different.
So even though we may want to guide learners to the same destination (target skill profile), the starting point should be different for every single learner.
To identify the exact skill level of learners, you need smart skill assessments. These help us to identify learning needs or skill gaps, which can then be used to steer learning activities and personal development for individuals but also entire organizations. But be careful: skill assessments come in different forms. There is one golden rule: the finer or more granular the assessment, the more precisely you will be able to locate your learners on the map. That’s why we believe in atomic skill assessments, the most granular type of skill assessments available.
Now we have our map, we know our destination and we know our starting point. What's next? Finding the most effective route or learning journey to reach our desired outcome.
Now we arrive at the part where the process often breaks down: most learning solutions only focus on the starting point. If you haven’t completed the first two steps of skills mapping, by defining target skill profiles and assessing individual knowledge levels, you will never be successful in building effective learning journeys. It will be like navigating in the dark, without a map, torch, starting point or a clear destination in mind. However, the good news is that if you’ve completed steps 1 and 2, the rest will fall into place, and you will be able to build effective, engaging and measurable learning journeys for every single learner, connected to real business outcomes.
Want to read more about this topic?
Download the full Skills Insights Report with skills data from over 500,000 job listings.
edyoucated is funded by leading research institutions such as the Federal Ministry of Education and Research (BMBF), the Federal Institute for Vocational Education and Training (BIBB), Federal Ministry for Economic Affairs and Climate Action (BMWK).