Blog post

What is a skills-based organisation?

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4 minutes

What is the definition of a skills-based organisation, and how does it improve hiring, talent strategy, workforce planning and skills development?

What is the definition of a skills-based organisation?

A skills-based approach is a model where skills are as important as jobs, education and experience when it comes to making decisions about work and talent management. These include technical skills, behavioural skills (such as emotional intelligence and problem-solving) and potential (latent or adjacent skills that can be developed for future success). 

Skills data is collected, structured and validated so that organisations have a clear picture of the specific blend of skills required for success in specific roles (a role skills profile) as well as an accurate understanding of the skills possessed by individuals (a personal skills profile). 

In a skills-based organisation, employees can be selected, evaluated and promoted based on their skills and performance, and encouraged to continuously develop and improve the skills they have. By focusing on a person’s skills in addition to their history or qualifications, it means workers can be managed and developed according to the needs of the organisation and the strengths of the employee, rather than because of a predefined career pathway. 

A key objective of a skills-based organisation is to build a more adaptable and resilient workforce that can quickly respond to changing business needs and challenges. And this is why skills-based organisations are in a perfect position to respond to the skills crisis

What are the benefits of skills-based organisations?

The benefits of a skills-based organisation are numerous.

  • Employee engagement and retention. Employees are more engaged and motivated, as they are recognised for the skills they have acquired and given the opportunity to develop their skills and take on new challenges.
  • The workforce is more versatile and adaptable. Employees are able to work in different roles and departments, which increases the organisation's flexibility and ability to respond to changing market conditions. Gartner predicted that nearly 33% of skills required in 2018 will no longer be needed in the market five years later - this need for skills flexibility and adaptability is more important than ever.
  • The organisation is more efficient and effective. Because employees are able to perform a wider range of tasks and take on more responsibilities, this reduces the need for specialised positions and increases the overall productivity of the organisation. 

Other benefits include: 

  • Increased productivity. With skills-based organisations identifying more suitable candidates, and providing their employees with more positive workplace experiences, it’s little surprise to learn that staff are more likely to meet their performance requirements. Data from McKinsey has indicated 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.
  • Greater innovation: A workforce with diverse skills and a culture of continuous learning is more likely to drive innovation. By fostering an environment that encourages knowledge sharing and collaboration, skills-based organisations can develop new products, services, and solutions at a faster pace.
  • Stronger employer brand: A skills-based talent management strategy signals an organisation's commitment to employee development, which helps attract top talent and build a positive employer brand. By positioning themselves as a skills-based organisation, companies can differentiate themselves in the competitive labour market and attract the best and brightest candidates.
  • Greater workforce diversity. Skills-based hiring provides an authentic route to equality of opportunity and many underrepresented groups without ‘traditional’ credentials on their resumes would benefit from greater opportunities. For instance, the World Economic Forum estimates that if companies hire for skills over traditional experience, the talent pool of women would increase by 24% more than men globally in jobs where women are underrepresented. 
  • Improving social equity. By removing the likes of four-year degrees from job requirements, a skills-based approach can accelerate career mobility and reduce barriers to entry into corporate career roles. This encourages non-traditional career paths and supports economic equity by improving access to higher-earning jobs. Organisations such as Delta Airlines have championed the skills-first approach as a way of improving equity.  

How do you create a skills based organisation?

To create a skills-based organisation, there are several key steps that need to be taken. Firstly, the organisation needs to identify the key skills that are required for success in each role. This should use multiple sources of insight including manager feedback, industry data and employee surveys.

Once the key skills have been identified, the organisation needs to create a structure that enables employees to develop and utilise those skills and managers to define activities and roles in the context of these skills. This may involve creating new roles and responsibilities, or redesigning existing roles to incorporate a broader range of skills. 

To create a culture that supports a skills-based organisation, the organisation needs to communicate the importance of skills development to its employees. This includes encouraging employees to identify the skills they have, provide transparency on the skills they and the organisation are likely to need in the future; and support employees with taking on new challenges to develop their skills. The organisation also needs to create a feedback loop, where employees can provide input on their skill development needs and the organisation can respond by providing the necessary resources and support.

Spotted Zebra - making the skills-based organisation a reality

At Spotted Zebra, we are powering the transition from career pathways to agile, skills-based organisations. We provide the platform to power skills-based organisations.  

People now move around as much as they move up, and the ascendance of an agile workforce is compelling every organisation to design work around people, not processes. Skills are taking the stage. Today, the best organisations align people to values, hiring and developing people based on the unique set of skills needed for success in each role in the organisation.

The Spotted Zebra platform ensures skills are the centre of every people decision. Whether talent acquisition, talent development or internal mobility, Spotted Zebra focuses on skills.

Spotted Zebra does this through its contextualised skills cloud, embedding your values and language alongside our science to ensure each people decision you make drives future performance. It then provides a suite of applications that work across every phase of the talent lifecycle. Whether you are hiring, thinking about development or promoting internal mobility, Spotted Zebra has created an application that puts skills first and makes the skills-based organisation a reality.

If you'd like to review your strategic workforce plan, our experts are available for a Skills Strategy Lunch and Learn. Click here to learn more and reserve a session for you and your team.