The Skills-Based Organization: A New Operating Model For Work and the Workforce

Fund Fellow Founders The Skills-Based Organization: A New Operating Model For Work and the Workforce

Organizations are transitioning from traditional job-based models to a skills-based approach. The latter method involves using skills as the focal point to achieve organizational agility, innovation, diversity, inclusion, equity, growth, and a positive workforce experience. This approach allows work to be broken down into projects or tasks based on the value to be created, outcomes to be achieved, or problems to be solved. Let's dive deeper!

Summary:

Unilever has been a pioneer in this transition, using an internal talent marketplace to enable fluid movement of skills across the organization. This approach sees each role as a combination of skills and abilities rather than a job title. The benefits of this model include more targeted recruitment, internal talent mobility, and the right application of skills to tasks and projects. This, in turn, accelerates business performance.

Skill-based approach is uptrend

A recent study shows that although the skills-based approach is gaining popularity, less than 20% of organizations have fully implemented it. However, companies that have implemented this approach have achieved better results than those with job-based practices. The transition towards the skills-based approach has been driven by a growing sense of responsibility for workers' welfare, with 79% of executives agreeing that organizations should create value for workers as human beings. This approach increases employability, promotes equity, and gives workers more agency and choice in applying their skills to work. Only 5% of executives, however, strongly agree that they invest enough in helping workers learn new skills to keep up with the ever-changing work landscape.

Talen shortage

Business and HR executives predict a talent shortage in the next three years, with 73% of respondents expecting to face this challenge. Consequently, many companies are looking beyond job experience to source skills creatively and find underutilized talent pools. Additionally, 85% of business executives believe that organizations need to adopt more agile working models to adapt quickly to market changes. 77% of them also believe that the flexibility to move skills is critical to navigating future disruptions. New technologies like automation and AI are driving the need for agility, leading organizations to adopt skills-based approaches to work.

Workforce as one

Workers are becoming less reliant on traditional job descriptions, with 71% performing work outside their job descriptions, and 55% planning to switch employment models throughout their careers. The emergence of skills-based organizations that operate based on principles of liberating work and workers from job constraints has led to the reconceiving of workers as a "workforce of one" with a unique portfolio of skills and capabilities. Skills rather than jobs now make decisions about work and the workforce, using fractionalizing work into projects or tasks, internal talent marketplaces, and cross-company talent exchanges. Organizations are redesigning the way work is organized, with 85% of HR executives planning or considering flexible porting of skills across work over the next three years.

More skills, less jobs

The "workforce of one" recognizes workers as unique individuals with a portfolio of skills, rather than being defined solely by their jobs. Organizations that view workers this way are more likely to have better financial results and retain high performers. Talent management in a skills-based organization is based more on skills and less on jobs, including skills-based hiring. By using AI to understand workers' skills and demonstrated capabilities, organizations can create opportunities for movement for those who have been previously shut out.

Finally

Skills-based approaches to workforce planning, pay, and performance management offer many benefits. By planning for skills instead of headcount, organizations can better understand their workforce's skills and invest in developing them to meet future needs. Skills-based pay can be determined by assessing the work performed, outcomes achieved, and skills needed, or by compensating employees based on their individual bundle of skills. Skills-based performance management can reward workers for their skill development. Organizations can foster skill development by defining criteria for different roles, discussing important skills with employees, and providing learning opportunities. Adopting a skills-based approach can

Full Story: HERE (Deloitte)

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