The rise of the Skills-Based Organisation

Conor Gilligan on unlocking success in the age of skills-based organisations

As the job market grapples with a major shortage of skills and workers, Britain’s near record low unemployment poses a deep problem, as reported by the Financial Times. Surprisingly, compared to G7 peers, the UK spends just half the EU average per employee on training. To address this challenge, proposals have emerged for developing higher-level technical skills qualifications and providing financial incentives for ongoing learning beyond the age of 18.

While many UK organisations acknowledge the skill shortages and offer flexible learning and development programmes: Is this enough?

Enter the Skills-Based Organisation (SBO), the key to unlocking agility and overcoming this hurdle. The journey begins by addressing the first problem – data. The lack of skills data hinders informed workforce planning strategies, primarily due to convoluted competency frameworks that have become obsolete in the face of disruptive forces like generative AI and a rapidly shifting skills market. Consequently, organisations have hired new employees based on capacity rather than addressing long-term skills gaps, leading to substantial layoffs when market shocks occur.

A staggering 90% of executives are actively experimenting with skills-based approaches across a wide range of practices

What exactly is an SBO?

In essence, an SBO is an organisational structure that prioritises leveraging and developing the unique skills and abilities of its employees. Within an SBO, employees have opportunities to enhance their skills through various interventions including; career pathways, digital learning content, social interactions, and on-the-job experiences such as projects or tasks. This approach enables organisations to maximise their workforces’ potential, foster cross-functional collaboration, and adapt swiftly to evolving business needs.

Where to start the skills-based transformative journey?

Becoming an SBO entails navigating numerous nuances and unknowns. Questions you might ask, could include:

  • How do skills align with our learning strategy?
  • Do skills align with our talent management, career development, and talent acquisition plans?

These considerations may seem overwhelming, but the consequences of not pursuing this path are even more detrimental. According to a recent study by Deloitte, a staggering 90% of executives are actively experimenting with skills-based approaches across a wide range of practices.

If the pandemic has taught us one crucial lesson, it is the pressing need for organisations to become more agile. SBOs are poised to thrive in this environment, while monolithic approaches that don’t embrace skills, will inevitably dwindle. Embracing agility requires constant iteration and adaptation. When embarking on the SBO journey, it is advisable to start small, focusing on building a Minimum Viable Product (MVP), and engaging closely with the business to understand its needs. By taking the business on this transformative journey, you ensure alignment and maximise the chances of success.

Organisations are exploring how they can build this skills data about their workforce. There are some challenges, for example, many organisations have several places employees go to learn digitally and often their HR system does not contain adequate, up-to-date skills data. Talent and learning leaders are now researching how they can create an engagement layer to capture skills data, through offering development opportunities to their workforce. As an example, McKinsey (see report reference below) have referenced how organisations are building Talent Incubators, essentially this means supporting employees who take on different roles within or outside of an organisation, creating a culture that prioritises coaching and development.  In McKinsey’s Skills Revolution, the Future of Learning and Earning Report, they found 80% of job changes involved people moving to new employers. This is a huge, missed opportunity for employers.

Furthermore, in this study McKinsey also found that a Fortune 500 Technology organisation had conducted a workforce planning initiative to map talent to specific business goals.  As a result of this, the organisation decided to then reskill 6,000 of their employees to new roles and upskill more than 20,000 into existing roles – leading to filling 80% of their skills gap.  This is just one of many examples of how organisations are building success by leveraging a skills-based approach.  This is creating huge value to organisations by creating efficiencies, moving with agility and reducing employee attrition levels.

Skills may be challenging, but their significance is undeniable. Skills are the key to future-proofing your organisation. So, don’t delay – start your skills-based transformation today!

Conor Gilligan, director of enterprise growth at Degreed

Conor Gilligan

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