This skills-based approach prioritises the skills and capabilities employees bring to the table over traditional qualifications like degrees or years of experience.
Skills-based practices help companies find and attract a broader pool of talent filled with candidates who are better suited to fill these positions in the long term. Such practices also help open opportunities to a more diverse set of candidates, including people without specific or typical credentials.
It’s an approach which has been shown to bring benefits to organisations. Research suggests that organisations adopting a skills-based approach are 63% more likely to achieve results.
Key differences between skills-based and traditional workforce strategies
The key differences between skills-based and the more traditional approach lies in how organisations approach talent management, including recruitment, development, and deployment of employees.
Here’s a comparison across critical areas:
| Traditional Workforce Strategy | Skills-based strategy |
| Focused on job titles, degrees, and work experience. | More weight given to skills, competencies, and potential. |
| Reliant on static job descriptions with fixed requirements. | Dynamic role definitions based on skills needs. |
| Training based on job roles and career levels. | Training targets specific skills gaps and future role requirements. |
| Career paths are linear and rigid. | Career paths are flexible and skill-driven, enabling lateral movement. |
| Organisations often slow to adapt to changing market demands due to rigid roles. | Agile and responsive by redeploying employees with in-demand skills. |
| Limited cross-functional collaboration due to siloed roles. | Promotion of cross-functional teams based on complementary skills. |
| Limited transparency in pay progression. | Clearer pathways for pay increases through demonstrated skill growth. |
Organisations are facing a series of challenges as advances in technology, disruption of marketers, and changing customer behaviour drive demands for new skills.
Recruitment
With skills shortages in the market, organisations can face difficulties finding qualified candidates. This means time to hire can be lengthy and more expensive.
Agility
Traditional approaches to workforce planning can leave organisations unable to adapt quickly enough to changing market conditions, and lacking the skills needed to meet business objectives.
Staff retention
Lacking a skills-driven approach, and related career growth opportunities, staff are more inclined to leave to seek to further their career elsewhere or may be disengaged and less productive than usual.
Lack of diversity, equity and inclusion
Limited diversity in hiring reduces the available talent pool and makes it harder to hire people with the right skills. It can also lead to inequalities in promotions and career growth, whether real or perceived
Workforce planning challenges
When organisations lack a view of available skills, they face challenges in several areas:
Putting a skills approach into practice requires data. If decisions are to be made around pay, promotions, or placements, then the data this is based upon needs to be reliable.
Organisations also need a single source of skills data so that decisions can be made across the organisation. While some organisations have made progress in this area, skills data is often siloed across departments and systems, making it difficult to achieve a unified view.
An effective skills-based approach also requires a common definition of skills which are relevant to the organisation. These often vary between teams, as well as between organisations.
To be able to make effective decisions, it’s important that the language around skills is consistent and understandable. This information can then be used to inform decisions around recruitment and workforce planning.
Skills taxonomies are often large data-sets of skills ‘tags’. In practice, more granular skills proficiency definitions are required for specific use-cases.
The challenge for organisations is that building up more detailed skills data requires significant effort and resources.
While off the shelf skills frameworks offer the attraction of a shortcut to implementing a skills approach, there can be issues with implementation.
Some frameworks can be too generic, and don’t always fit in with the terms used in the organisation. This means greater effort customising language and skills descriptions.
To build out the skills data across an organisation, to the level of detail and granularity that is required for key use cases requires a significant investment in terms of resources, effort and cost.
Once organisations have completed some work collating skills data, there is further complexity in the process of consolidating this data across the business.
Practically speaking, this is about sharing different data sources, managing input and reviewing the process of approval around the business.
Once a skills framework has been agreed and completed, there remains the challenge of constant monitoring and updating. Organisations need to keep up with changing skills, changing needs in the business and this requires continuous updates.
Finding talent continues to be a challenge, and a skills-first approach supports speed and agility by redeploying 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 107% more likely to place talent effectively. 77% of business and HR executives believe “flexibly moving skills to work” is critical to navigating future disruptions.
A skills-based approach means you find the right talent in unexpected places, which means you can better utilise the workforce by unlocking untapped capacity and potential.
It also drives employee performance, as when they can see a clear link between efforts and career advancement, they are more motivated and productive.
Employees are also more motivated when they are equipped to perform their roles thanks to skills-based hiring, training, and placement, which allows them to focus on activities that directly impact the business.
Ensuring that you have up-to-date, accurate, enriched data about the skills of the people inside your organisation is the ideal way to match people and opportunities and better personalise 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.
A skills-based approach allows organisations to discover talent that has previously been overlooked, by broadening the talent pool.
In the past, people may not have been considered for roles, as their previous experience and job titles may not have been a perfect match, even if they have 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.
Providing opportunities for growth internally, for employees to use their skills effectively helps to retain people who may otherwise feel bored, and ready for a new challenge.
Moreover, opportunities for development of skills and the opportunity to work on diverse projects can increase job satisfaction and loyalty. According to research, 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.
Using skills data as the basis of performance management allows organisations to create a fairer and more transparent system that can drive individual and team performance.
For example, by identifying employees’ specific skills, 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 with strategic objectives.
Skills-based performance management can also define precise, measurable skill expectations for each role or project. Standardised skill benchmarks help to ensure consistency of reviews across teams.
Through skills-based assessments, subjectivity and bias can be removed from evaluations and performance reviews. 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, identifying competencies that are missing or underrepresented. Recruitment efforts can then focus on these gaps.
With employees’ skills mapped, it becomes easier to identify and develop internal candidates for leadership and other specialised roles.
Employees identified as potential successors in key roles can then receive targeted development plans, ensuring readiness for key roles.
Expand the available talent pool by focusing on skills over qualifications and experience. (or assessing skills equally). Using objective skills data replaces guesswork in hiring with measurable insights.
This focus also reduces the potential for bias by reducing reliance on subjective criteria.
Career paths can be mapped to skills, making them more transparent and achievable.
Improved career pathing via a structured framework helps employees to understand career progression and the actions needed to achieve career goals. Customised learning plans can be created to accelerate readiness for higher roles.
Transferable skills also enable employees to explore cross-functional moves, adapting their career path as skills and organisational needs change.
Well documented skills mapped to roles makes it possible to compare compensation across the organisation more accurately and effectively.
A skills framework also allows organisations to show a clear justification for compensation.
Skills data and skills-based performance reviews enable the effective identification of skills gap, and subsequent training needs. L&D investment can then be based upon skills rather than job roles.
L&D resources can then be focused only on initiatives that have a measurable impact on business outcomes, reducing waste. A data-driven skills approach also allows the more effective evaluation and optimisation of training programs.
Budgets can also be focused in line with strategic priorities such as the adoption of new tech or entering new markets.
While there are challenges in building up the skills data and putting a skills strategy into practice, technology now provides a way to overcome key obstacles.
Rolemapper can help you to:
RoleMapper's AI-driven, modular solution will ease the pain of creating, managing and updating your job architecture and job catalogue.
Join our live product demo to learn more about how RoleMapper can help clean up & harmonise your job architecture & job descriptions.
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