USA 
United Kingdom
In 2022, Deloitte surveyed 1,021 workers, 225 business and HR executives in ten countries. 98% said they plan on moving more toward becoming a skills-based organization.
This shift has seen organizations from Unilever to IBM reconsider their approach to work allocation. The skills-based approach, in its purest form, would see organizations do away with the very concept of jobs. Instead, each employee (or future hire) would be tagged by themselves, their peers, or technology with a set of skills.
Organizations could then – again, with the help of technology such as AI-enabled talent intelligence software – match employees to projects, tasks, and work. Or else, identify and bridge capability gaps with skills-based hiring or L&D.
The completion of each project, task or piece of work, rather than the fulfillment of a job description, would therefore become the driving force behind business outcomes.
The challenging reality of a skills-based approach
In theory, this brings many benefits from true internal mobility to a more scientific approach to functions such as pay and talent acquisition. It can also increase the agility of organizations, allowing them to cope with rapid change and avoid the need for costly layoffs.
In practice, this brings a complicated reality. Reorganizing the entire allocation of work is a huge overhaul and requires a re-think of HR functions including talent acquisition, succession planning, and L&D.
The mere idea of creating a skills taxonomy for a global organization is enough to give any HR leader a headache. Beyond the endless ‘hard’ or technical skills relevant to any particular role, function, or industry, is the task of defining ‘soft’ or interpersonal skills.
Which skills matter most? How narrow or broad should definitions of a skill be? How should organizations assess employees on skills, and assign skills to roles? And how can these tasks be done with any level of consistency in a global organization?
Skills taxonomy has become a discipline (and job role) in its own right, and many platforms will have their own skills taxonomy.
However, with the individual needs of each organization, and the sheer scale of rolling out a new operating model to a global workforce, HR must also consider more fundamental shifts to make the skills-based approach a reality.
Skills-based hiring
Perhaps the most obvious shift an organization can make to become skills-based starts with its approach to talent acquisition.
Where companies have traditionally hired based on resumes, experience, college degrees, and job titles, shifting to skills-based hiring can reframe work away from broken and outdated job descriptions.
“We are at the start of this journey, but we’re fortunate to work with a talent pool in the thousands and have a commitment to internal mobility,” says Kirstie Loveridge, Executive Vice President of People & Culture, AEG Europe, a subsidiary of AEG Worldwide. “Many of our head office and salaried staff came to the positions they’re in through following a skills-based recruitment approach, transitioning from hourly to salaried employees accordingly.”
“Consider removing university-based (college-based) qualifications as a requirement for entry roles and instead focus on the skills required to excel in the position,” she recommends. “We’ve found that in doing so, we’re able to reach a greater pool of talent which surfaces nontraditional candidates, with the end result being a broader and more inclusive workforce.”
Indeed, TestGorilla’s 2022 State of Skills-Based Hiring report found significant improvements in core talent acquisition metrics at companies using skills-based hiring: 92.5% reduced mis-hires, 89.8% reduced total cost-to-hire, and 91.2% increased employee retention. Revolut, for example, has reduced time-to-hire by 40% and increased candidate quality by moving towards skills-based hiring.
This has also been reflected in the federal government following a 2020 executive order that required government institutions to de-emphasize college degrees in favor of applicant skills.
At a basic level, organizations can achieve this shift by re-writing job descriptions, dropping requirements such as college degrees, and focusing instead on qualifying the skills and experience of applicants.
The application process should shift from surface-level requirements or past achievements to focus on assessing the proficiency of applicant skills.
Moreover, creating a talent community for applicants alongside internal employees is another major shift leading organizations are taking. Where applicants might previously be lost following rejection, they can now be matched to other opportunities for work within the organization.
Skills-based mobility and development
Talent communities and marketplaces represent a major development in the employee lifecycle. Rather than hiring, onboarding, developing and losing an employee, companies can now emphasize acquiring, growing, and distributing skills within the organization.
Internal talent marketplaces, and talent intelligence technology that powers these community-based platforms, have also grown in popularity. Mastercard’s ‘Unlocked’ and Unilever’s ‘Flex’ systems are two widely documented examples of impactful skills-based talent networks.
These platforms offer employees better access to internal mobility than ever before. At Mastercard, for example, within the first few months of launching the platform, 51% of some 26,000+ employees had explored career paths.
A true skills-based marketplace such as this does away with job titles and concerns around promotions, demotions, or horizontal career moves. Instead, it connects employees with the opportunities that match their skillset, and moreover, identifies skills gaps for work that is most appealing to the individual.
Connected with a skills-based L&D program, such networks can quickly equip employees with the learning programs, training opportunities, or mentorship and coaching connections they desire or the organization requires to build core capabilities.
A skills-based approach is a truly forward-thinking and evermore popular approach to redesigning our organizations. It will not be an easy journey, particularly for large-scale organizations – but there are already clear use cases and proven steps to make a start.
Have you made a shift to a skills-based model? Please let us know in the comments the challenges and successes you have experienced on the way.
