Skip to main content

5 Benefits Of Becoming A Skills-Based Organization

The traditional approach to talent management – from hiring to promotions – assesses people based on their experience, education, and previous job titles. 

But the fierce competition for talent is forcing companies to ask whether they are giving themselves the best possible chance of finding the right person for each role; whether great candidates may be getting overlooked.

To this end, they are starting to embrace the notion of focusing on the skills needed for particular tasks: becoming a skills-first organization has risen up the business agenda.

This means identifying the skills relevant to do the work, then matching people (with those skills) to the tasks at hand. You will need to codify skills, communicate them, and give people opportunities to develop them. 

The beauty of a skills-first approach is that it can – and should – be applied across the full talent lifecycle. Indeed, using a single currency and common language for candidates, employees and alumni means you can think more holistically about the human capital that your business needs. (What we call Talent Lifecycle Management.) 

Putting skills first across the talent lifecycle is a modern solution: it provides a lot of the answers you need in response to the changing economic situation.

1. Become more agile

Skills shortages show no signs of abating. Finding talent will be a challenge for at least the next decade and beyond. Not having the talent to sustain and grow the business will cost global economies over $8.3 trillion dollars by 2030, according to Korn Ferry

A skills-first approach is one that supports speed and agility: that is, redeploying talent to the most essential work. Properly understanding the skills you have in the organization helps you hire and move people to roles that will not only support business goals, but provide on-the-job learning opportunities to develop people – and help you fill gaps in the future. According to Deloitte, skills-based organizations are 107% more likely to place talent effectively. 77% of business and HR executives believe “flexibly moving skills to work” is critical to navigating future disruptions. 

“What would really make me feel good is… the very simple idea that more companies are doing a better job of helping people be in the right jobs, doing the right things; things that align with what they want to achieve, they just have more human beings walking around that are making productive contributions in things they care about and in a way that makes their whole life richer.” – Larry Emond

There is also increased agility in other parts of the business, such as product development. Deloitte found that skills-based organizations are 52% more likely to innovate, and 57% more likely to anticipate change and respond effectively and efficiently. 

Being able to deftly redeploy resources also means you are better able to respond to customer needs, as they change, with the right skills.

2. Unlock greater productivity

A skills-based approach means you find the right talent in unexpected places: you can better utilize the workforce by unlocking untapped capacity and potential

This isn’t a new concept. A 1984 study found that hiring for skills is five times more predictive of job performance than hiring for education, and more than two times more predictive than hiring for work experience. But the current economic landscape makes it more important than ever to tap into new sources of talent, to broaden the pool you are fishing from, and make the most of the talent you already have – making the right selections on how to use a contract workforce or internal talent.

“I think we have to start thinking about propensity to learn, and start hiring for potential. We talk about this, but we never do it well. We need to hire for potential to learn. Because actually we can teach people the skills.” – Wagner Denuzzo

3. Enhance employee wellbeing

82% of employees say it’s important for their organization to see them as a person, not just as an employee, according to Gartner. 47% of HR leaders are prioritizing employee experience in 2023. Ensuring that you have up-to-date, accurate, enriched data about the skills of the people inside your organization is the ideal way to match up people and opportunities, and better personalize the employee experience.

A focus on skills, and on unbundling the job, means people can feel like unique, valued individuals, thriving in roles that let their skills come to light.

Giving people a choice of assignments adds to the employee value proposition of flexibility: people want choices around the type of work they do, when and how they do it, and they want to be held accountable. 

“It’s time to change your mindset, as people are leaving companies because of the lack of flexibility. It’s a matter of trust and flexibility to match business and employee interest.” – Ignacio Aranguez Montero

4. Boost diversity and equity

A skills-based approach powered by explainable AI also allows businesses to discover talent that has been overlooked. Recruiters and hiring managers will find that people they may not have otherwise considered are put forward for roles, because – although their previous job titles don’t seem like a perfect match – their skills (and potential) could be ideal. This has a positive impact on diversity within an organization, and can reduce bias at every stage of the talent lifecycle, not just in hiring.

“80% of business executives say making decisions about hiring, pay, promotions, succession, and deployment based on people’s skills rather than their job history, tenure in the job, or network would reduce bias and improve fairness; and 75% say hiring, promoting, and deploying people based on skills (vs. tenure, job history, or network) can help democratize opportunity and improve access to it.” – Deloitte

5. Retain more employees

A skills-based approach – within a smart AI-powered talent mobility program – drives retention. Giving people career growth opportunities internally, rather than them having to leave to grow their careers, means you can hold on to people who are ready for a new challenge, and provide more opportunities for workers to learn ‘on the job’ by applying their skills to different areas within the organization.

With a new definition around work – smaller ‘tasks to be done’ – workers are more free to try new things, learn continuously, and build on the skills they already have, using them in new ways. This is learning at its best, of course: where people are solving real problems, in the flow of real work.  

According to Deloitte, skills-based organizations are 98% more likely to have a reputation as a place to grow and develop, and 98% more likely to retain high performers.

“Through a skills-based approach, companies can boost the number and quality of applicants who apply to open positions and can assist workers to find more opportunities to advance internally, which can help employers improve retention.” – McKinsey

The future is skills

In order to make access to work fairer, and ensure that work gets done in a challenging labor market, companies are considering how they can match people with “jobs to be done” based on something meaningful, useful and equitable: skills.

“I do think in the future, it is going to be table stakes to have a talent intelligence platform as part of HR. The future is really putting them into a cauldron of skills matching and then picking the best and the brightest with a skills-based approach.” – Elin Thomasian

There is clearly a business imperative for employers to embrace a skills-first approach. But there may also be a societal one. As workers can find better jobs based on their skills rather than educational background, birthplace, connections or experiences, we will start to see the realization of the Beamery mission: fair access to work and opportunities for all. 

Learn more about becoming a skills-first organization, and the importance of data, technology and cultural change, by downloading our free report.