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In a business world where stability is a myth and change is the only constant, companies that neglect to prioritise upskilling their workforce are not just risking inefficiency—they're flirting with extinction!
We’ve seen businesses cease to exist because they couldn’t future-proof their talent pool in time. Instead of focusing on creating their centers of excellence through structured training programmes, these companies often go on a hiring spree as and when they win a new project with new skill requirements. The long-term consequence of this approach can be disastrous.
This is where skill-based organisations come in.
What is a Skill-Based Organisation?
It refers to a system where skills—not job titles—take center stage, allowing organisations to break down tasks into projects, problems to be solved, outcomes to be achieved, or value to be created. Talent is viewed as the holders of a portfolio of competencies that are entirely flexible and easily deployable across projects. Imagine being known in your organisation as the go-to person for AWS migration or a Python wizard and the likes, instead by some ambiguous labels such as software developer, database manager, and so on.
Unilever, always a pioneer in promoting new ideas that lead to workforce transformation, is already at the forefront of this revolution. A global Deloitte survey of more than 1,200 professionals echoed this trend, showing that organisations are eager to embrace a skills-based organisational model.
At its core, a skill-based organisation is all about the skills that employees bring to the table and how those skills can be applied across projects and business units throughout the organisation.
Let me explain this phenomenon with the case of Harish, whom a renowned digital agency hired as its marketing manager. Six months into his job, the agency landed a big-ticket project that required extensive hands-on expertise with Instagram ads. Unfortunately, the team had lost its Instagram specialist just a month earlier, and the proposed project kick-off date was fast approaching. But here’s the kicker. Harish has already been upskilling himself with a self-paced course with hands-on live projects on Instagram ads as part of the firm’s skill-gap management programme. As a seasoned marketer, it wasn’t difficult for him to quickly grasp the nuances, and he seamlessly filled the gap left by the specialist the team had previously relied on for running campaigns on this platform.
What could be the alternative without such a proactive upskilling programme? The company would have had to initiate a hiring process, potentially delaying the project and damaging its reputation with the new client. Instead, Harish's upskilling helped avoid all the hassles. This is the magic of a skills-based organisation—you always have the right talent for any of your projects.
Moreover, the skills Harish acquired for this project could also be applied to future projects. Even if he doesn’t have to work hands-on in those projects, his expertise will provide invaluable guidance on tasks involving advertising across social media channels.
Of course, the benefits of skills-based organisations do not stop there. To begin with, they eliminate the system of stringent boundaries for sharing resources with the right skills. And here, we're not merely talking about sharing resources across projects within the same team. Imagine an employee supporting the functions at different business units throughout the organisation.
Let’s again use our marketing team scenario to explain this. Suppose a talented copywriter also has a strong interest in machine learning technologies. After brushing up on this knowledge through a relevant course, he became a valuable asset to the development team, helping them train customer service bots. In contrast, the customer service team directly benefitted from these integrations.
This is how skill-based organisations "unbox work from jobs." Let’s summarise it all and compare the two approaches:
Role-based organisation:
Here, employees are hired and trained for predefined roles with fixed responsibilities, leading to a linear career path. This approach can be limiting in today's fast-changing business environment.
Skills-based organisation:
Here, employees contribute to the company's growth with individual skills rather than being confined to a single role. They can apply their abilities across various projects, fostering a dynamic work environment that encourages continuous learning and flexibility.
Understanding these differences will enable organisations to choose wisely, keeping with their strategic goals and industry demands.
Let's address the most critical question: How do you build a skills-based organisation? The Learning and Development (L&D) team facilitates this transition. To successfully implement such programmes, L&D must adopt a predictable framework and adhere to best practices and policies. With this in mind, I developed a reference architecture that provides a clear compass for companies aiming to create a skills-based organisation.
Allow me to outline the sequence of steps that an organisation and its Learning & Development (L&D) team should undertake to establish a comprehensive skilling pipeline for the organisation.
Step 1: Skilling Demand Management - Understand Skill Landscape
The organisation should thoroughly understand the skill requirements, ensuring they align with current and future business needs. The skill requirements should be analysed by reviewing the capabilities needed to meet existing commitments. It is then essential to classify these skills as sunrise skills (in demand), sunset skills (decreasing demand), and legacy skills (rarely used and no longer in demand). Additionally, organisations should analyse their future business pipeline and understand the skills required to service them. The activity mentioned above should be performed at periodical intervals if manually done, or there are demand forecasting tools available in the market, like spire.ai and others, that could achieve this on a real-time basis.
Step 2: Supply Management – Understand Skills of Current Talent
To effectively manage their workforce's skills and proficiency levels, organizations must make concerted efforts to collect and update this crucial information continuously. This can be achieved through periodic manual assessments, ensuring the data remains relevant and reflects the current capabilities of employees. Alternatively, leveraging automated tools like Spire.AI or other tools can provide real-time insights into the skill sets available within the organization, enabling more dynamic and responsive workforce planning. Keeping this data up-to-date is vital for aligning employee skills with organisational needs and enhancing agility and competitiveness in a rapidly evolving market.
Step 3: Tools and Assets - Develop a Skills Adjacency Matrix
The purpose of a skill adjacency matrix is to provide the organization with a clear view of what skills are closer to one another and how close they are. Can a person with a particular skill be upskilled or cross-skilled in another? This can be answered by referring to a skill adjacency matrix. Firstly, the organization would have gathered the skill inventory from Step 1 and should be able to build the adjacency with the support of Subject Matter Experts (SMEs). Today, many tools provide this information in real-time as AI powers them and continually updates the skills data by crawling job boards and other sources. After creating a skill adjacency matrix, it is essential to map the enablements (training, certification, job support) that could help people develop those skills.
Step 4: Skilling Demand Management – Skilling Demand
This step involves assessing the existing skill sets within the organisation to identify areas of strength and where skills are lacking. This will help highlight the organization’s areas of strength while identifying gaps that need to be addressed.
Demand Monitoring – Categorising Skills Demand
After understanding the skills required and available, organisations must monitor business demand (orders) to estimate what skills are needed to fulfill them. Based on this assessment, organisations can categorise demand into Made to Stock and Made to Order (using the supply chain nomenclature).
Made to Stock: This category involves proactive skill development where employees acquire new skills in anticipation of future demand. These individuals are trained and ready to deploy their newly acquired skills as soon as the market becomes immediate.
Made to Order: This category addresses immediate and specific demands. Skill development in this context is immediate and purpose-driven, ensuring that employees are quickly trained to meet specific, pressing needs.
Step 5: Skilling Echo System
This step involves developing the necessary learning assets and selecting the right platform. Organisations must plan the infrastructure to support continuous learning, including digital tools and technologies that facilitate seamless access to learning resources.
Assets: It is essential to create a repository of learning materials, such as video tutorials, interactive modules, and comprehensive guides. These resources should be continuously updated to reflect the latest industry standards and practices.
Infrastructure: Building a robust technological infrastructure is critical. This includes high-speed internet, secure servers, and the hardware to support digital learning platforms. A well-maintained infrastructure ensures that employees can access learning resources anytime, anywhere.
Adoption of Learning Frameworks: Adopting established learning frameworks such as ADDIE (Analyze, Design, Develop, Implement, Evaluate) or the Kirkpatrick Model helps in systematically designing and evaluating training programs. These frameworks provide a structured approach to developing and assessing the effectiveness of learning initiatives.
Learning Experts: Engaging learning and development (L&D) experts, instructional designers, and subject matter experts (SMEs) is crucial. These professionals bring in-depth knowledge and expertise, ensuring the training programs are relevant, effective, and aligned with organisational goals.
Together, these components ensure a comprehensive and structured approach to learning, enabling employees to acquire new skills efficiently and effectively.
Step 6: Facilitating Continuous Learning
One of the most crucial elements of a skills-based organisation is fostering continuous learning. Learning must become an ongoing process when an organisation prioritises skills over traditional job roles. This dynamic model encourages a constant upskilling culture, ensuring every employee is constantly evolving.
Step 7: Assess the Effectiveness of the Skill Development Programme
The final and most crucial step is evaluating the skill development programme's efficacy. It’s essential to assess whether the learning solutions deliver the desired outcomes.
Speed to Deploy: This metric measures the time it takes to deploy employees to new opportunities after completing their training. A shorter deployment time indicates a more efficient and effective training programme, allowing the organisation to respond quickly to market demands and changes.
Conversion Rate: This is the percentage of employees who have completed new assignments after training. A high conversion rate signifies that the training programme prepares employees for new roles and responsibilities, enhancing the organisation's agility and adaptability.
Avoidance of Revenue Leakage: This metric quantifies the money saved or generated by re-skilling a resource and deploying it in a new opportunity. It underscores the financial benefits of effective training programmes by reducing the need for external hiring and optimising internal talent utilisation.
By following this structured framework, organisations can successfully build a skills-based approach, ensuring that talent development is aligned with business goals and drives long-term growth.
Closing Thoughts
Transitioning to a skills-based organisation can significantly enhance operational agility, employee engagement, and overall business performance. However, the question remains: Is a skills-based model suitable for every organisation? The answer is no—it may not work for all. Companies in highly regulated industries or those with rigid operational frameworks may find implementing such a flexible structure challenging. Additionally, organisations with well-established job roles and responsibilities may need to undergo significant cultural and structural shifts to adopt this model effectively.
So, how do you know if you need a skills-based organisation? Consider transitioning to this model if you face any of the following challenges:
Certain companies, such as technology firms, service industries, and manufacturing and production sectors, stand to gain significantly from adopting this approach. In other words, organisations that experience frequent shifts in market demands or technological advancements benefit the most from this transition.
Lastly, while transitioning to a skills-based organisation presents numerous opportunities for growth and innovation, it's essential to leap only after carefully considering your organisation's needs and readiness. By understanding the specific demands and trends in your industry, companies can make strategic decisions on how to build an agile, flexible, and diversely skilled workforce—one that propels the organisation forward in an era marked by rapid change, instability, and unpredictability. I believe this is where my framework can make a significant impact.
