Talent Management

The Importance of Skills-Based Talent Management Strategies

Concept of skills-based talent management strategies
Concept of skills-based talent management strategies
Headshot of Meredith Caine

Meredith Caine

Meredith Caine is a Senior Consultant at Educe who specializes in the implementation of Cornerstone OnDemand Learning, Performance, Recruiting…

Skills are becoming a hot topic in the world of Talent Management, and for good reason.

In fact, Forbes has predicted that a focus on skills, used in conjunction with Learning and Development, will be one of the top five HR trends in 2024. As more businesses begin to embrace skills-based approaches to Talent Management – creating skills taxonomies, implementing skills-related HR technologies, and developing long-term skilling strategies – it’s important to understand what skills are, how they impact organizations and their employees, and what businesses can do to leverage the new strategies and technologies that come with it.

What are “skills” and what sets them apart?

So, what are “skills” and how do we distinguish them from other common components of Talent Management? More specifically, how can we understand competencies vs skills?

Though competencies and skills have a lot in common, and are even used interchangeably at times, the way organizations leverage them differs. Competencies are often used to refer to an overarching grouping of skills, knowledge, behaviors and attitudes that an employee should possess to be successful. They may be specific to a role or apply across an entire business. In practice, competencies are used by organizations in formal Performance Review processes to set expectations for job roles and levels, and are used as benchmarks when measuring an employee’s performance and deciding on promotions.

On the other hand, skills often refer to single proficiencies possessed by an employee, often gained through training and experience. These could be “soft skills” such as emotional intelligence or verbal communication, or “hard skills” such as proficiency in a foreign language or a certificate in a content development software. Skills and skill proficiencies may be identified by an employee’s manager or peer, or even the employee themself. In practice, attributing skills to an employee is typically done in a less formal manner than competencies, though it can still be incorporated into official performance processes. Skills can help guide an individual’s development on a day-to-day basis, help an organization identify skill gaps in their workforce, and source internal hiring. Overall, competencies are usually associated with formal performance appraisals, while skills align more closely with learning and development.

Skills are at the forefront of emerging HR technologies

Artificial Intelligence (AI) is taking the entire world by storm, including Talent Management. Much of skills functionality within HR technology leverages AI to identify, build, and measure an organization’s skills and overall workforce agility. Generative AI can be used to recommend tailored training programs to employees, identify gaps in an organization’s skillset, and match top talent to particular jobs. According to HR tech expert Melanie Lougee, generative AI in skills strategies has the potential to “revolutionize learning”. It can be used to recommend learning to an individual not only based on skills they establish interest in, but also based solely on an employee’s job role or resume.

Benefits of Skills at the Organizational Level

Implementing skills can help organizations retain employees, improve workforce planning, and recruit better talent.

Increase Retention with Skills-Based Talent Management

With high turnover across industries in the wake of the Great Resignation, retention has become more important than ever. According to a LinkedIn study, employees who are provided with ample learning and growth opportunities are 2.9 times more likely to be actively engaged than those who aren’t. Another LinkedIn Study confirms that the majority of employees say training and development opportunities increase their job satisfaction and are an important aspect to consider when evaluating a job offer from a company. Organizations can leverage skills and skills-related technologies to enhance their learning and growth opportunities by tailoring their catalog to the skills employees are looking to develop and providing training on skills needed for a specific job. Doing so allows a company to upskill their workforce and increase job satisfaction, ultimately aiding in retention efforts.

Improve Planning with Increased Workforce Agility and Adaptability

As technology continues to advance rapidly, some jobs are becoming obsolete while others are growing to require more advanced or different skills. This has led to an increased demand for upskilling and reskilling to support workforce agility initiatives within organizations. By implementing a skills taxonomy and leveraging skills-first strategies, businesses can remain adaptable and stay on top of these changes. For example, let’s consider a trending skill within the workforce today – cloud computing. A company can leverage skills technology to fill any gaps in their training offerings related to this capability, and then identify the talent most equipped to learn it.

Recruit Better Talent

Skills technology makes it easier for recruiters to identify candidates with specific skillsets needed for a job. In addition, it enhances recruiters’ ability to hire and promote internally, fill vacancies more quickly and retain the company’s top talent and highest performers.

Benefits of Skills at the Individual Level

As an employee, there is much to gain from skills-based Talent Management approaches.

Leverage Tailored Development Opportunities

With effective incorporation of skills into learning and development initiatives, individual employees benefit from tailored growth opportunities based on their current skillset and those skills they wish to develop. For example, an employee may hope to enhance their written communication skills, and thereby could receive an automatic recommendation within their LMS for an online course on how to write effective emails. By interacting with skills functionality, employees can help find the training they need to succeed and grow in their careers.

Upskill Without Changing Jobs

Changing jobs can be stressful and often feels like the only option for employees experiencing a lack of opportunity for upward mobility within their company. Skills functionality helps individuals upskill within their role without needing to move jobs. According to a LinkedIn study, 48% of workers would consider changing jobs just to update their skills. For many, being able to upskill within their current role is an incredibly enticing reason to stay in their job and avoid the stress of needing to look elsewhere.

Establish Expertise

As an employee, becoming an expert within your organization increases your value tenfold. Skills functionality will not only enhance your development, but also enable you to identify yourself as an expert. In doing so, peers may come to rely on you, and you may earn increased opportunities to expand your role and move upwards at your company.

Best Practices for Skills-Based Technology Adoption

Create A Skills Taxonomy

To implement skills-based practices in your organization, you’ll need to start by building your skills taxonomy. To do so, you’ll need to identify the skills required within your organization, and what skills your employees already possess. Consider expanding this skills taxonomy by associating critical skills to different job roles and outlining how skills relate to one another.

Establish Skilling Strategies

Once you’ve defined your skills taxonomy, you’ll need to define your goals and the strategies you will employ to help meet those goals. Consider the following questions:

  • What do you hope to gain from skills-based Talent Management?
  • How will you incorporate skills into your already established Talent Management processes and strategies?
  • How will you leverage skills to upskill and reskill your workforce?
  • Who will be responsible for managing skills at your organization?
  • How will you measure success on your skills-based initiatives?

Incentivize Employee Involvement

Employee involvement is critical to successful skilling strategies, and what better way is there to encourage employee involvement than with incentives? Employee buy-in early in the process will enable your organization to get the most out of its skills-based functionality and technologies. Employees will need to interact with the skills taxonomy to get the most out of it. Whether identifying the skills they possess, or assessing the proficiency of a direct report, employees’ use of skills functionality will vastly increase its effectiveness. To identify skills gaps, tailor learning opportunities, and source internal talent, employees must be involved from the start.

Embrace Change

Implementing skills-based Talent Management approaches may seem like a daunting task, especially if it’s a major shift for your organization, but embrace the change! Positivity goes a long way in making change feel more comfortable across a company, particularly when it comes from the top. Help employees understand how this change will benefit them individually, as well as the organization as a whole, and convey that it’s something to be excited about.

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