More organisations are moving towards a new operating model for the workplace - one which values skills over job titles.
This skills-based approach offers the chance to move from a job-centric, experience-driven workforce strategy to one that is more dynamic and agile.
Deloitte research found that 77% of business and HR executives believe ‘flexibly moving skills to work’ is critical to navigating future disruptions.
There are a range of potential benefits from adopting a more skills-driven approach, from greater organisational agility to improved employee retention and productivity, as well as more diverse and inclusive recruitment strategies.
A skills-first approach supports speed and agility by redeploying the best talent to the most essential work.
Understanding the skills you have in the organisation helps you hire and move people to roles that will not only support business goals but provide on-the-job learning opportunities to develop people, and help you fill gaps in the future.
According to Deloitte, skills-based organisations are:
Just 14% of business executives surveyed by Deloitte strongly agreed that their organisation uses its employees’ skills and capabilities to their fullest potential.
A skills-based approach addresses this issue, allowing organisations to identify the talent and skills in their workforce, sometimes in unexpected places, which enables them to look at untapped talent.
This can have a beneficial effect on employee performance - making full use of their skills increases motivation and productivity; even more so when they can focus on activities that directly impact the business.
Ensuring that you have up-to-date and accurate data about the skills of your workforce is the optimal way to match people and opportunities and thereby improve the employee experience.
By focusing on skills, employees can be made to feel like unique, valued individuals, thriving in roles that allow them to put their skills into practice.
In the past, people may not have been considered for some roles purely because their previous experience and job titles may not have been a perfect match, even if they had the required skills.
A change of focus which values skills over experience can have a positive impact on diversity within an organisation and can reduce bias at every stage of the talent lifecycle beyond recruitment.
Employees who feel they have few opportunities for growth or progression can become bored and frustrated, and will naturally begin looking for a new challenge elsewhere.
These issues can be avoided if there are more opportunities for growth internally, and for employees to use their skills effectively.
Moreover, opportunities for development of skills and the opportunity to work on diverse projects can increase job satisfaction and loyalty. According to Deloitte, skills-based organisations are 98% more likely to have a reputation as a place to grow and develop, and 98% more likely to retain high performers.
With pay transparency legislation being introduced around the world, establishing clear, skills-based pay frameworks helps organisations put this transparency into practice more effectively.
When compensation is tied to specific skill levels, certifications, or proficiencies, employees can understand how pay levels are calculated, and increases are earned, reducing ambiguity.
Standardised pay for similar skills also reduces bias and discrimination, supporting fair and equitable compensation.
Using skills data as the basis of performance management allows organisations to create a fairer and more transparent system that can drive both individual and team performance.
For example, by identifying employees’ specific skills through reviews, development plans can be created that impact organisational goals and individual aspirations. Through the tracking of skills key to business goals, performance management can also link individual contributions to strategic objectives.
Skills-based assessments based upon standardised skills benchmarks can also help to ensure consistency of reviews across teams, and help to remove subjectivity and bias. Managers can then provide more specific and actionable feedback on skill gaps or strengths, rather than general comments about performance.
Skills data can make workforce planning more effective by focusing on employees' current and potential capabilities rather than job roles or titles.
Current employee skill data can be mapped against organisational needs, allowing businesses to pinpoint skills gaps in critical areas. This insight means that hiring, training, or reskilling efforts are targeted to address future requirements.
Skills data drives greater precision in workforce planning, as it can help identify competencies that are missing or under-represented, which in turn supports more inclusive hiring strategies.
There are challenges involved in switching towards a strategy based around skills, but there are also multiple benefits.
It can help organisations implement pay transparency policies, improve employees retention and performance, improve recruitment, and ultimately drive improved business performance.
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