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Skills – the new currency for transforming the world of work

19.02.2024
Reading time: 6 min

In order to be successful in a dynamic market, it is important for companies to recruit and retain the best talent and to react flexibly to market changes. In this context, the focus is increasingly on skill-based models that enable companies to make the best possible use of their employees’ potential. Instead of maintaining rigid job descriptions and hierarchies, they rely on skills-based models to become more flexible, resilient and competitive.

In reality, we often observe that many organizations continue to cling to outdated ways of thinking that focus heavily on traditional roles and specific tasks. Applicants are assessed and hired based on these criteria. In other words, decisions are still primarily made on the basis of jobs and not skills.

“We need to start seeing a detailed range of skills in each role and not just the name on a piece of paper.”
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Hanns-Bertin Aderhold
Managing Director
Cobrainer GmbH

This article is dedicated to the change in the way companies deal with their employees. We explore new horizons and present an innovative approach: away from rigid job descriptions and towards a focus on individual skills.

What is a skills-based organization?

A skill-based organization represents an approach to work organization that emphasizes the importance of skills and competencies. In contrast to established work structures, which are divided into fixed job roles with clear tasks and responsibilities, in a skill-based organization work is split into smaller units that are described and assigned by skills. These units can be diverse, ranging from projects and tasks to problem solutions and targeted results.

The skills-based approach has met with great interest, particularly among managers. According to a survey by Deloitte, 81% of managers surveyed favor either a multidimensional approach, where employees are assigned to projects based on their skills and interests (60%), or an extended approach, where employees’ tasks are aligned with the desired outcomes (21%). Only 19% of respondents prefer an approach that focuses on traditional job roles.

“The term ‘upskilling’ may give the impression that it is primarily about improving one’s professional status and moving up the career ladder. In my view, however, the focus should be much more on continuous growth and the development of new skills. In short, it’s less about ‘up’ and more about constant ‘skilling’ – a lifelong process of personal and professional development.”
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Lucas Senzel
Director Human Experience Management (HXM) Transformation
mmmake GmbH

Advantages of a skills-based organization

One of the biggest challenges for companies is finding suitable employees. Either this process is time-consuming or the required skills are simply not available on the market – a problem that is difficult or almost impossible to solve.

However, the skill-based organization offers a promising solution to this problem. It enables companies to align their talent development strategies with their business objectives to ensure the organization has the required skills and competencies. At the same time, it promotes a culture of continuous learning, which in turn is crucial for attracting and retaining employees. It also enables companies to identify existing skill gaps and close them through targeted training programs, which increases employee performance and productivity.

A skills-based organization also offers numerous advantages for employees. Firstly, it promotes professional development by prioritizing individual skills and competencies. Secondly, employees can develop their skills in a targeted manner and thus advance their careers. Thirdly, such an organization creates a fair and transparent working environment. Because evaluation and recognition of performance is based on ability, biases and subjective judgments are minimized, resulting in a fair work environment. Employees can clearly see which skills are required for certain roles or projects, which makes it easier to assign tasks.

At a higher level, the skill-based organization creates agility for companies, i.e. the ability to adapt quickly and flexibly to changing market requirements through dynamic skill management. Growth and innovation are also promoted, as the continuous development and development of new skills is made possible. At the same time, a skills-based organization improves the employee experience and satisfaction by creating autonomy, meaningfulness and development opportunities.

Ultimately, skill-based organizations enable a flexible and fluid use of employee skills that no longer reduces people to their job titles, but perceives them as holistic individuals.

Four pillars of skill-based organization

The transformation to a skills-based organization is not a trivial task, but requires a profound change in corporate culture, processes and systems. However, the transformation can be made easier by following a few important steps:

  1. Define skills: The first step is to identify the skills that are relevant to the company’s work and strategy. This includes both technical and human skills, which should be described and categorized in a common framework.
  2. Measure skills: Once the relevant skills have been defined, the employees’ abilities must be recorded, evaluated and documented. This can be done using various methods such as self-assessments, feedback, tests or certificates.
  3. Communicate skills: The third step is to connect the employees’ skills with the tasks at hand. Various mechanisms such as matching algorithms, skills marketplaces, communities or leaderboards can be helpful here.
  4. Develop skills: The continuous promotion and updating of employee skills is an important part of a skills-based organization. Learning platforms, mentoring, coaching and job rotation are just a few examples of offerings that can contribute to the further development of employees.

The maturity level of one’s own company with regard to the skill-based approach can be divided into five segments that reflect a progressive development towards a fully skill-based organization. A solid basis for this approach is a clear job and skills architecture, which lays the foundation for understanding the skills and competencies of employees.

The next maturity level focuses on the development of skills profiles, harmonization and governance. The aim here is to ensure the uniform application and management of skills across the entire HR system and process landscape. This enables employees to be better aligned with the company’s goals and improves the efficiency of resource allocation.

In a further step, the skills database is embedded in all of the company’s talent processes, including recruiting, talent management and succession planning. By considering skills and competencies as key criteria in the selection and development of employees, the organization will be better able to achieve its strategic goals and adapt to change.

In the fourth step, as a preliminary stage to a fully skill-based organization, skills and their interaction data from the respective talent processes are actively used for the planning and transformation of the company. This means that skills are not only used for the ongoing management of talent, but also serve as a key component for strategic decisions and change initiatives. This step marks a turning point at which the organization begins to fundamentally align its way of working with the individual skills of its employees.

“The clever use of modern AI technology is a key enabler for the transition to a skills-based organization. By using them, companies can better identify their skills, assemble teams more effectively and provide their employees with easy access to learning resources.”
Hanns-Bertin Aderhold
Managing Director
Cobrainer GmbH

In the transformation to a skills-based organization, it is crucial to create a corporate culture that promotes continuous learning and personal development. Employees should be encouraged to actively participate in cultural change and constantly expand their own skills, whether through further training or learning new skills. Managers play a central role here: they must not only understand the importance and advantages of the change towards a skills-based organization, but also actively integrate it into their daily management practice and drive it forward.

In order to ensure that the skills-based organization is firmly anchored in the corporate culture, the implementation of digital tools, platforms and systems (e.g. B. Cobrainer) are of great benefit. In particular, self-service applications with a focus on modern employee experience help to promote employees’ own initiative, support them in the continuous development of their skills and reduce the effort involved in skill aggregation for the company. This is because employees willingly contribute their skill data to such setups and refine it in the course of using the platform.

By skilfully integrating such technologies, the organization can further strengthen its agility and adaptability and successfully adapt to the demands of the modern working world.

Conclusion

The introduction of a skills-based organization not only promises a more effective way of working, but also a more holistic and people-centric corporate culture. This innovative approach gives companies the opportunity to adapt more flexibly to constantly changing requirements, to position themselves for the future and to exploit the full potential of their employees.

By creating a corporate culture that recognizes individual strengths, companies can not only strengthen employee loyalty and motivation, but also drive innovation.

The author
Transformation-experts
Felix Ehrenfels &
Hanns-Bertin Aderhold
Felix Ehrenfels, Senior Consultant HXM-Transformation at mmmake and Hanns-Bertin Aderhold, Managing Director Cobrainer, share a passion for inspiring people and developing organizations. They share a vision of actively shaping the HR world of tomorrow with innovative tools.
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