Skills Management

What Does It Mean to Be a Skills-Based Organization?

Skills-based organization is gaining popularity as the modern approach for successful businesses. Learn what it means to be a skills-based organization.

In today's rapidly changing business environment, organizations recognize the importance of being agile and adaptable with the changes that come with technology, market demands, and economic trends.

One area receiving increased attention is how best to leverage employee skills to adapt to the changing environment and help drive success. 

The concept of skills-based organization is now gaining recognition as a modern and practical approach to managing human resources and achieving organizational goals.

Becoming a skills-based organization is crucial to driving employee success and staying competitive. 

To achieve this, it’s vital to have a clear understanding of what it means to be a skills-based organization, and the benefits it offers.

In this article, SkillsDB, the hub for employee success, will explain what it means to be a skills-based organization. From this, you can make informed decisions about how to cultivate and utilize the skills of your workforce to drive success.

Definition: What is a Skills Based Organization?

A skills-based organization is an organization that focuses on competencies and human skills (also historically known as competency-based management). It breaks down classic job descriptions and hierarchical structures, and its processes are deliberately adapted to the specific talents of employees.

There is less focus on the primary job description (and/or job role) and its related skills, and more focus on how the wealth of skills of each employee is utilized for the growth of the organization.

Speaking in an interview by myHRfuture, Susan Cantrell, Deloitte's VP of Workforce Strategies, said “work is no longer a 1-to-1 relationship between employees and jobs, but a many-to-many relationship between work and skills, and that opens up all kinds of new opportunities for both the organization and workers.”

Instead of structuring work in terms of specific job roles, work is broken down into projects and tasks with specific skill requirements. Employees with the right match of skills are added to the tasks where their skills can be best utilized.

Initially, employees may be hired for job roles, but would not be restricted to their role. Speaking further on this, Susan Cantrell said “workers can take a percentage of their time, they’re still performing their core jobs, but then they can flow anywhere in the organization to projects and tasks”.

A recent Deloitte survey demonstrates that this approach is already gaining traction. Of the executives who responded, 63% “say work in their organizations is currently being performed in teams or projects outside of people’s core job descriptions”.

In a fully skills-based approach, organizations abandon job roles altogether. Work becomes structured according to the needs of the organization (broken down into projects and tasks), and the skills of employees. With this approach, the organization creates an internal marketplace of skills, from which they can draw the best talent to execute projects according to market trends and business needs. This creates an ever-evolving need for employee skill tracking, upskilling, reskilling, and cross-skilling.

What Skills Are Considered?

In a skills-based organization, it is important to track core skills such as specifics in coding, marketing, and management. These form the basis of the services or products the organization offers. 

However, it is just as important to track and utilize soft skills such as creativity and leadership as these can play a pivotal role in driving the overall success of business initiatives and endeavors. Skills-based organizations make it a practice to identify, track, and nurture hard skills, but they also give equal attention to soft skills which may be more subtle and difficult to measure.

What Are the Characteristics of a Skills-Based Organization?

A skills-based organization is characterized by several key principles that prioritize the development and utilization of its employees' skills. 

Skills Identification and Tracking 

A skills-based organization cannot exist without a software platform to manage it all. To implement a skills-based approach, organizations must invest in robust systems and processes for skill identification and tracking. This involves assessing and documenting the skills possessed by each employee and creating a comprehensive skills inventory.

Skills Focused Work Allocation

A skills-based organization utilizes its employees' skills rather than relying solely on job titles or seniority. Employees are recognized and assigned work based on their combination of soft and hard skills, and not based on rigid roles with predefined tasks. This also helps eliminate unwanted biases from the workplace, like gender, sex or race.

As each employee works in the organization, data about their behaviors, abilities, and knowledge is tracked, along with skills development over time. Each employee's future work and career development is based on their demonstrated competency.

skills search

Caption: A manager using SkillsDB searches for ASP Developers who also have experience in reporting. By tracking skills in this way, employees can be placed in the right projects for their skills.

Talent Management

Talent management is also strongly emphasized, as the organization focuses on attracting, retaining, and developing the best talent within its workforce.

For optimal results, it may use a framework like Deloitte's talent management maturity model, the SkillsDB competency framework, or other skills tracking tools to implement practices and processes.

Employee Development

Employee development is paramount in a skills-based organization. It provides opportunities for employees to develop and improve through training, coaching, and mentoring programs.

The organization invests in developing its capable workforce and preparing for the future of workforce development.

Skills Based Volunteering

Organizations may utilize the skills-based volunteering organization model, allowing employees to contribute their skills to the community.

Ultimately, a skills-based organization is focused on building the workforce of the future as it promotes skill-based jobs and encourages employees to self-identify their proficiencies. By doing so, employees inform the organization of the myriad of ways that they can contribute to a stable, successful workforce.

Benefits of a Skills Based Organization

There are several benefits of becoming a skills-based organization, including:

  • Increased productivity and performance. By focusing on the skills and abilities of employees, a skills-based organization can ensure that the right people are in the right jobs, leading to increased productivity and performance.
  • Attraction and retention of top talent. A skills-based organization that prioritizes employee development and career progression is more likely to attract and retain the best talent.
  • Improved employee engagement and satisfaction. Employees who feel valued and challenged in their work are more likely to be engaged and satisfied. This is better achieved when employee skills and competencies are utilized.
  • Better alignment of skills with business goals. By focusing on skills and abilities, a skills-based organization can better align the skills of its workforce with its business goals and needs.
  • Greater flexibility and adaptability. A skills-based organization is better equipped to adapt to changing business needs and respond to new opportunities as they arise. Employees can flow from one project to another based on their skills, creating a system that is primed for change and future growth.
  • Improved employee development. A skills-based organization investing in its employee development is more likely to cultivate a highly skilled and capable workforce.
  • Increased Innovation. By focusing on skills and abilities, a skills-based organization can tap into its employees' unique strengths and perspectives, leading to increased innovation and creativity.

Transitioning to a Skills Based Organization

A skills-based organization is a model that prioritizes the skills and abilities of employees in all aspects of the organization.

This approach offers numerous benefits, including increased productivity and performance, attraction and retention of top talent, improved employee engagement and satisfaction, and greater flexibility and adaptability.

However, despite its many benefits, implementing a skills-based organization can present several challenges, including resistance to change, difficulty in assessing employee skills, investment in training and development, and misalignment of skills with business goals.

In the next article in this series, we discuss the challenges to skills-based management, and how to overcome them. Please subscribe to our mailing list if you want to be informed when this is published.


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