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Stephanie Neusser
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The term “skill-based organization” is currently a trending topic. Because it's a relatively new term, there's a lot of confusion about what it means. Deloitte defines it as a new form of organization that places skills and human skills at the center of talent strategies and thus creates a new operating model for work and workforce.
Companies that focus on the skills of their employees not only manage their talents differently, but also organize their work with a new focus. Instead of using workplaces as the predominant way of organizing work, these organizations divide traditional roles into projects and tasks according to their skills, which enables greater agility and internal mobility.
In this blog, you'll learn 3 prevailing skill trends and why companies are adopting skill-based organizational strategies. You will also learn which pitfalls to avoid when introducing skill-based strategies.
A storm broke out on the labor market in 2022, caused by three important factors of change.
First, demographic change and rapid globalization intensified competition. Then came the pandemic, which prompted many people to reconsider their life priorities, which led to an above-average number of layoffs.
The third factor of change is reskilling. This is not a temporary or unexpected event. Every company needs a continuous reskilling program to enable workers to meet the changing needs of their jobs. Many of the new skills required are due to digitization, which, however, is changing and developing much faster than other skills. This means that they expire faster and have to be checked almost constantly.
At present, less than a third of companies have already made the transition from hiring and developing employees for jobs to a skill-oriented organization. However, in order to meet current and future workforce challenges, companies must transform themselves into skill-oriented organizations.
Sounds disheartening? But it doesn't have to be that way. Companies can do a lot to stay ahead of trends in the world of work before they impact the market. And what role do findings about the skills of employees play in this? We've decided to find out.
We have collected and evaluated data from more than 500,000 job advertisements. We have primarily focused on modern, technology-oriented and technology-related occupations. This includes jobs such as software engineering, product management, account management & sales, data science & engineering, marketing and recruitment.
We extracted the skills listed in the job ads and compared them with our own skill taxonomy. We then calculated how often both soft skills and digital skills were mentioned in job advertisements.
Our resulting report, “Transitioning from Jobs to Skills,” shows three trends in the current job market:
Our study has shown that the growth of digital skills is no longer limited to technical occupations. Most jobs now require technical knowledge and skills. Skills now required in non-digital functions include data analysis, reporting, analytics, and software development. Good knowledge of tools is also expected in these areas.
For some workers, this means a change in mindset, not just skills. Many joined the company at a time when technology was still within the purview of a particular department. It's important that these employees understand why it's important for them to constantly update their technology skills. It may have been difficult for them to acquire these skills in the first place. So make sure they get appropriate support and listen to their feedback on any mistakes they may have made in previous upskilling efforts.
It can be a challenge to get all employees involved on the journey of skill transformation. To stay ahead of the curve in your industry or market, you need to constantly evolve your strategy and the specific initiatives and technologies you use. However, for new products to be successful, every employee must be able to use them and explain their benefits to your customers.
When you invest in new technologies, whether for customer-oriented products or business processes, this must always go hand in hand with support for your employees.
Conversely, we must therefore also ensure that our digital experts are able to lead and manage teams. In the past, this was less of a requirement and more of a “nice to have” feature. But now that technology is no longer an island, its experts must acquire the same management and leadership skills as other departments.
Another driving force is the increase in hybrid forms of work, which require closer teamwork, better planning, and wellbeing support. The new work model also entails greater responsibility for the mental health of employees, meaning that managers must display more intuition and emotional intelligence. Communication is of paramount importance, of course, but so are organizational skills and the ability to react to crises or opportunities.
Our investigation has shown that purely technical functions are dying out altogether. We predict that this trend will continue and intensify in the coming years.
As workers adjust to skill-based learning and former career boundaries disappear, those who already have cross-functional skills are best placed to manage collaboration and support the skill revolution.
The demand for applicants with experience in roles such as agile coach, product owner, data translator, or project manager is increasing. These people are already familiar with the agile way of working and have probably always worked across functions. For them, acting as a liaison between several departments and teams within a company is a matter of course. They are also good at judging whether in other teams Skill Gaps exist.
It is a logical consequence that these are the people who should help you plan skill transformation projects. Recognize that they are your biggest asset.
As workplaces evolve and teams move closer together, the division of tasks into individual job descriptions is outdated and inefficient. It's easy to see why this habit is hard to break: For decades, workplaces have defined the way we allocate work and carry out general HR work. We provide feedback, hire, promote and organize teams around colleagues with specific roles and skill sets.
If the past few years have taught us anything, it's that we must anticipate change before it overwhelms us. For companies that want to future-proof their workforce, the agility of their skills will become increasingly important. Now is the time to respond to the already known changes in the economy and business environment and prepare for what's next.
Can you afford not to make the transition and work smarter? It is time to act.
To successfully transform your company into a skill-based organization, you should first answer three strategic questions:
For a competency transformation to be successful, you must be able to identify and define measurable goals. But unfortunately, most companies are still flying “data blind” when it comes to the skills they need for transformation, such as a Gartner survey from 2020 shows. In fact, 53% of respondents in a Gartner survey said that the biggest barrier to a smooth transition to a digital workforce is that companies are unable to pinpoint the skills they need. The only way to structure skills and define measurable goals is to use a Skill taxonomy. A skill taxonomy is the basis for all skill development. This structure forms the backbone of your personnel development activities and can serve as a skill map. It serves as a guide for individual learners, but can also steer your entire company. From here, it's easy to define goals and set flexible, measurable learning goals for target people.
We have our map (skill taxonomy) and we know our destination (Skill profile). What we still need is the starting point — an accurate assessment of our current skill level.
The problem with most learning solutions is that they mistakenly assume that every single learner has the same initial situation, but as we know, every learner is different.
Even though we want to lead learners to the same goal (the desired skill profile), the starting point should be different for each individual learner.
To determine the exact skill level of learners, you need intelligent Skill Assessment. These help us to identify learning needs or skill gaps, which can then be used to manage learning activities and the personal development of individuals, but also by entire organizations. But be careful: Skill assessments come in various forms. There is a golden rule: The finer or more granular the assessment is, the more precisely you can locate your learners on the map. That's why we believe in atomic skill assessments, the most granular form of skill assessment available.
Now we have our map, we know our destination and we know our starting point. What's next? To find the most effective way or learning journey to achieve our desired outcome
Now we get to the part where the process often fails: 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 evaluating individual knowledge levels, you'll never be successful when it comes to creating effective learning journeys. It is then like navigating in the dark, without a map, flashlight, starting point or a clear destination in mind. The good news, however, is that once you've completed steps 1 and 2, the rest will fall into place and you'll be able to create effective, engaging, and measurable learning journeys for every single learner that are connected to real business outcomes.
Would you like to read more about this topic?
Download the full Skills Insights Report with skill data from over 500,000 job offers.
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).
