The Skills-Based Organization: Buzzwords or Business Imperative?
Originally published on LinkedIn
This article is co-authored by:
Bal Mattu Founder at OpusView
Farzeen Foda Founder and Principal, HR Strategy & Consulting at PeopleStrategy.ca
Colleagues working together.
In recent years, we’ve witnessed an evolving trend among companies to reconsider their organizational structures by embracing the skills-based organization (SBO) operating model. The importance of skills is nothing new, but the shift from a rigid, job-centric model to a person-centric one for work is gaining traction and showing signs that it’s here to stay. A 2022 Deloitte survey found that 89% of executives surveyed reported that skills are becoming important to how organizations design work, deploy talent, manage career, and value employees. In the same study, 73% of employees reported that skills-based practices would improve their experience at work (1). This shift is driven by the recognition that these traditional models don’t provide the flexibility that our “new world” workplaces need in order to keep pace with the change that is constantly re-defining jobs. Just as jobs are constantly being re-written, so to, are the qualifications for those jobs and the paths to qualification. This precipitates the need for a skills-based approach to building sustainable and innovative organizations and the long-term business and people benefits that can come with it.
Proactive and personalized workforce planning
Taking a person-centric perspective to workforce planning and organizational design allows a much-needed shift from fitting employees’ diverse skills and experiences into defined boxes, to identifying which skills (soft, functional, operational, technical, and industry-specific) and abilities each employee has, and how best to utilize them in light of the changing market demands. SBOs are, by the nature of their operating philosophy, better placed to proactively meet the needs of the market by taking a more agile approach to workforce planning. Required skills can be matched to work requirements more accurately; different skills can be combined into ad hoc teams to tackle specific problems; and workforce planning can recognize which positions would benefit most from the development of particular skills. Skills can be directed towards the specific requirements for the day and into the future; thus, the organization encourages itself to learn – both its individual employees and the organization itself. Though adoption of the SBO approach remains in its early days, organizations that have adopted this approach have been found to be 49% more likely to achieve improved processes and greater efficiency, and 57% more likely to anticipate change and respond effectively and efficiently (1).
Better leverage the diversity of skills and experiences within your organization
As the world of work continues to evolve, individuals may move through multiple careers and geographies throughout their working lives which creates many more unique paths to qualification for a given job. Articulating the exact skills and experiences required for a job becomes increasingly irrelevant in this dynamic world of work and by sticking to these traditional methods, we risk excluding highly skilled individuals from the workforce or not leveraging their skills to the fullest. SBOs have the unique advantage of integrating diversity, equity, and inclusion all the way through their design and as a result fostering more equitable people practices which ultimately leverage the full complement of skills and experience of your company’s workforce.
SBOs achieve stronger employee engagement and business outcomes through intentional and equitable internal mobility and career pathing
Lack of career growth and advancement is one of the biggest drivers of employee turnover and one of the most pressing human capital challenges for many organizations. SBOs have the tools to address this challenge by fostering more intentional and equitable internal mobility and career pathing. The 2022 Deloitte survey found that 80% of executives surveyed felt that making hiring, pay, promotions, and deployment decisions based on skills as opposed to job history, tenure, or network would improve fairness and reduce bias (1). With the SBO approach the positive impact on employee engagement is clear as employees have the confidence that their skills and merit are driving internal mobility and succession planning, and leaders have the tools to provide more robust career pathing guidance using skills as the guide. The skills-based approach drives employee engagement by placing emphasis on personal and career growth in a personalized and holistic way, which naturally increases employees’ intent to stay with a company and the research supports this as SBOs are 98% more likely to retain high performing employees (1). After all, who wouldn't be enticed by opportunities for skill enhancement, engaging projects, professional advancement, and continuous learning?
So, what will it take to shift to a SBO?
To successfully implement a strategy that focuses on skills, solid backing from cross-functional management, thorough execution planning, and the right tools are crucial. This entails utilizing modern software for talent management that can effectively map, survey, assess, enhance, and apply skills. Making use of the appropriate technology is an essential component in the process of transitioning into an SBO. It aids in overcoming obstacles and maximizing the advantages brought forth by this strategy.
Additionally, introducing a skills-based model requires a significant shift from traditional models of work and role design, but can be effective with strong skills assessment tools to capture the breadth and depth of skills among the workforce and effective change management practices to guide HR teams, employees, and leaders through the transition. Skills assessment tools must be robust enough to capture the fullest possible picture of skill breadth and depth. Change management strategies should also prioritize transparency and the value-add from the shift for employees and the organization as a whole. Furthermore, employees and leaders should be provided a safe environment for questions to be addressed and recommendations considered throughout the process.
You may be wondering, is the shift to a SBO really that important? The short answer is, you guessed it, yes.
In the present-day ever-changing business landscape, adhering to a conventional job-centric approach can prove to be inflexible and sluggish in accommodating the organization's evolving demands. On the contrary, organizations that prioritize skills with up-to-date data are better equipped to navigate through uncertainties and cultivate an environment conducive to innovation and opportunity.
With a transition to a SBO, HR teams will be able to capture more robust data to inform organizational design and workforce planning and play a more strategic partnership role with leaders. Leaders will have a better pulse on talent risk within their teams and have better visibility to the skills and capabilities over or underrepresented to inform future hiring needs. Employees will see more data-informed career pathing and holistic development conversations that recognize the full complement of their skills and experiences. And finally, organizations as a whole can realize stronger business outcomes as they can more efficiently mobilize skills toward strategic priorities.
As businesses continue to evolve, seeking improvements in organizational effectiveness, the popularity of a skills-based operating model is on the rise and expected to continue. While the transition to a SBO will require thoughtful planning and may present a significant shift from the status quo, the associated benefits in terms of adaptability, creativity, inclusion, satisfaction, and employee engagement make it an important strategic lever for achieving business success while helping employees thrive at work.
If you're interested in finding out more contact either Farzeen Foda: farzeen@peoplestrategy.ca or Bal Mattu: bal.mattu@ideascast.com.
1. Cantrell, S., Griffiths, M., Jones, R., Hiipakka, J. 2022. The skills-based organization: A new operating model for work and the workforce. Deloitte Insights Magazine. Issue 31.
About OpusView: OpusView operates at the cutting edge of HR and technology through their proprietary skills management platform which enables robust skills mapping, skills improvement planning, and succession planning using SBO best practices. The OpusView solution helps organizations maximize the potential of their workforce in a cost-effective way while driving a deeper understanding of the competencies within an organization to make more informed workforce planning and organizational design decisions.
About PeopleStrategy.ca: PeopleStrategy.ca is a Human Capital Strategy and Organizational Effectiveness consultancy leveraging people analytics, technology, and change management to design inclusive ad equitable systems and processes that enable people to thrive at work. PeopleStraegy.ca works with organizations across various sectors to drive people innovation through the lens of Diversity, Equity, and Inclusion.