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Industry Trends

Why is it urgent to accelerate your transformation to a skills-based organization?

11 min.

skills-based organization

While more and more pioneering organizations have succeeded in transforming themselves in depth, others are still in the process of transformation, and some are still at the project stage. However, putting skills at the heart of the business and processes is now the key to sustainable growth. It must be said that companies are evolving in a constantly changing market. Customers are more and more demanding, technology continues to run amok and talent is becoming increasingly difficult to recruit and retain. Winning in this environment is a real challenge. To do so, organizations must transform themselves and move away from a strategy that relies on degrees and academic curricula. Building a skills-based organization remains the most effective and viable solution. We explain why.

Skills-based organization: what are we talking about?

According to the 2023 report “Putting skills first: a framework for action” by the World Economic Forum in collaboration with PwC, over the next five years, skills deficits and the inability to attract talent will be the most significant obstacles for organizations. It is therefore becoming fundamental to value this competence and to put it at the center of companies’ concerns.

As the name suggests, this approach focuses on skills. Rather than relying on diplomas, work history or previous job titles, the idea is to focus on the talent’s good skills. Skill then becomes the only key criteria for recruiting, assigning, developing, promoting and retaining talent. This strategy means that companies acquire the skills they really need for a particular job. In order to get a job, talents are considered for their know-how. This means decoupling the job from the role so that people are no longer defined by their job title or role. Talent with skills and capabilities that can be deployed in a fluid way.

This organization is relevant to all businesses, not just service companies. It is central to business growth and talent career progression. As mentioned in the introduction, many companies have already adopted this approach. For example, IBM announced in May 2021 that a college degree would no longer be required for about 50% of job offers in the US. For Accenture, the rate is 26%. We are therefore witnessing an evolution in organizations. Steps are being taken and new approaches, more current and aligned with their challenges, are becoming obvious. Moving from a “job-based” model to a “skills-based” model remains the key to driving. growth.

skills-based organization
Source: AIHR

How do skills stimulate business and talent growth?

Yes, before putting competencies at the heart of your organization, you need to understand how they are an engine for stimulating the growth of companies and their talents. Considered as an exchange currency, this resource is now a wealth creator, both for the company and for its talents.

Unlocking a talent pool

In the same report, the World Economic Forum cites a recent estimate: by 2030, 85 million jobs could remain unfilled worldwide. The cause? A lack of candidates with the necessary skills to fill them. This would result in a loss of $8.5 billion in annual revenue. Turning to this skills-based approach can help companies attract a wide range of hidden talent. Experts who otherwise have difficulty participating in the labor market. The skills-based approach can unlock organizations’ talent pools. How can this be done? By identifying people who have the key competencies that are in demand, but who do not have the diplomas and career paths that are traditionally the basis of these skills.

Guarantee a high quality of expertise to clients

This solid base of knowledge allows us to maintain our competitive advantage by offering high quality services to our clients. Their needs are met and new opportunities can be found. It is also a solid source for continuous innovation and differentiation. A skills-based organization allows for the proactive development of skills to continuously enrich the expertise of its talents. As a result, the company stays in tune with the needs and developments of its market.

For example, service and consulting companies sell to their clients not individuals, but the skills they need to deliver on projects and deliverables. One example is cybersecurity skills, which are currently in high demand.

Increasing employee productivity

In its recent study “The skills-based organization: a new operating model for work and the workforce“, Deloitte reveals that organizations that apply a skills-based culture are 63% more likely to achieve results than those that have not adopted it. It’s back to our eternal virtuous circle: investing in the skills of your talent fuels their motivation and commitment.

skills-based organization
Source: Deloitte

In a way, the skills-based approach democratizes access to opportunities, notably through the implementation of a talent marketplace that makes new opportunities available and visible. At Whoz, this approach is illustrated by the Job Board.

Advancing and retaining talent

For talent, the benefits are just as important. Employees aspire to work in a company that allows them to develop their skills and grow throughout their careers. This type of approach supports that ambition. It provides concrete answers. In our era of change and mobility, talents have a real need to feel heard and engaged in a company. By being assigned to increasingly challenging missions, talents become more motivated and are more likely to stay with the company. This approach also allows for greater agility; talent is more easily deployed on more varied assignments aligned with the skills they have or want to develop.

The skills-based approach allows for better development and retention of talent, and therefore reduces turnover. As we know, less turnover leads to a reduction in the associated costs. Indeed, it is always more expensive to replace a departing employee than to ensure, through training or practice, the development of new skills or the reinforcement of existing skills.

Promoting diversity, equity and inclusion

This focus on skills helps to reduce barriers to entry, and therefore to open up positions to people from non-traditional backgrounds. Social and geographical origin, gender or disability are no longer selection criteria. Only skills counts. This “skill first” approach reduces the gaps in hiring, but also throughout the career of the talent. The teams are made up of profiles with a wide range of experience and expertise, allowing for the sharing of ideas and perspectives.

Companies that move quickly to this skills-based model give themselves a better chance of being and staying competitive. The skills-based approach allows for a better use of human capital. Organizations increase their ability to remain competitive and resilient in the face of change.

Skills-based organization: from recruitment to retention

Between talent shortages and involuntary attrition, finding well-trained talent is becoming an increasingly complex challenge. It is becoming crucial for companies to adopt other approaches. Skills-based approaches remain the most relevant, and should be used at all stages, from hiring to retention.

Recruiting: Attracting Top Performers

This focus on skills is the best way to identify and recruit the best profiles. By getting rid of criteria related to diplomas and previous experience, the recruiter goes straight to the point. Only general or technical skills count. In this hiring phase, companies focus on the expertise that the candidate has and that he has put into practice in his previous positions. For service companies, the ability to identify candidates with the right skills from the sourcing phase speeds up the recruitment process. It also allows them to pre-position candidates for future assignments.

Development: building capacity and addressing talent shortages

The skills-based organization is ideal for building an ecosystem of skilled talent. Once the skills of each profile are identified, it becomes easier to identify skill gaps. Whether offering training, conferences, workshops or coaching, companies are empowered to develop the skills of their employees. Enriching their knowledge base allows them to respond to customer demand with precision. By fostering employability and career development, they can better overcome and anticipate talent shortages.

Deployment: Connecting talent to opportunity

When it comes to deploying talent, the idea is the same: skills matter more than experience and job titles. Because what a client is looking for is not an individual locked into a typical role. They want specific, verified, approved skills that can deliver the best possible value. With a skills-based organization, talent aspirations and opportunities are aligned.

By empowering them to develop their potential and advance their careers, companies can more easily deploy them to challenging and emerging jobs.

Retention: retain talent and reduce turnover

Overall, this skills-based organization improves the overall feel of employees in their work experience. Opportunities are better distributed among individuals, talent is better developed and a culture of diversity, equity and inclusion is fostered. This DEI culture is a boon to organizations as it attracts talent and improves performance. By being more valued, the risks of their departure are reduced.

How to operationalize a skills-based approach?

Making a big leap towards change

In our same Deloitte study, 85% of HR managers are considering revising their work organization. Why? So that skills can be transferred flexibly over the next three years. Also, only 10% of HR executives say their organization effectively categorizes and organizes competencies in a taxonomy or competency framework. But of these, 85% say efforts are underway to improve this situation.

Step by step

So the question arises: how do you transform your organization by putting competency at its core? There are several steps to take:

  • Identify the core skills the company needs to meet its customer needs.
  • Measure the level of seniority of the skill to assign the talents to the right missions. It is important to understand their current skill level in order to assign them to the right projects and propose development plans.
  • Detecting skills: Whoz AI allows to identify skill gaps for a specific talent, and therefore to prepare recruitment and/or training plans.
  • Develop skills to meet the company’s needs, through training, coaching, mentoring programs, etc.
  • Align human resources with its objectives.
  • Foster collaboration between teams and remove hierarchical barriers to facilitate communication and decision-making.
  • Implement a culture of continuous learning among employees: learn, learn and share learning with peers.

These are clear steps, but they remain complex to understand without support. And that’s where the use of technology comes into its own: simplifying these steps to transform intelligently. As we can see, companies are struggling to keep their skills data up to date and accessible. For the majority of them, this information is located in several disconnected systems that are rarely updated.

Whoz: a skills-based talent deployment platform

The solution is based on an AI designed for skills management. And in this stack, we find the reference innovation developed by Whoz: the skills ontology. This ontology does not adapt to each organization. It is a unique repository, which can be enriched, but which adapts to all organizations. For service companies in particular, this repository consists of more than 100,000 skills dedicated to the industry.

Only organizations that have a skills hub, i.e. a repository that enables the fine-tuning of each talent’s skills collections, have the capacity to transform themselves into a skills-based organization. In other words, operating by skills tags, or what we call “role-based”, does not allow this transformation to take place. But Whoz offers a skills hub, called Talent Cloud, which is based on an ontology.

As you can see, transforming to a skills-based organization is crucial, even urgent, for organizations that want to become more efficient. These skills remain the key to growth and competitiveness in today’s ever-changing environment. There is a virtuous cycle between business and talent: investing in and developing the right skills ensures the growth of talent, and therefore of business.