How to shift to a skills-based HR strategy in 3 steps

A skills-based approach to talent management is one of the buzziest strategies in the HR space – and for good reason.

The benefits of looking at your employees holistically through the lens of their skills and not (strictly) their job history appear endless. The impact of a skills-based approach –  not only on your employees’ individual career paths and your company’s ability to anticipate and address business needs, but also the role of HR as a transformative, strategic leader – has the potential to be profound.

Further, there’s a growing belief that organizations as a whole will experience a shift from being job-based to skills-based. Michael Griffiths, Senior Partner, Principal, and Lead in Deloitte's Workforce Transformation Practice, recently told Forbes that, “The boundaries for the organization—both how you engage with your workforce and who your workforce is—are kind of disappearing.”

But shifting to a skills-first approach from the traditional “job” lens is nonetheless still a shift. It requires a nuanced and thoughtful change management touch that allows your leaders and your people to internalize the value of skills as a mindset as much as a talent management strategy. It is, in Griffiths’ words, a cultural change and “you cannot make the change to skills if you don't have your work defined in more of an agile way.”

Let’s take it step by step and see how you can adopt skills-based HR practices at your company.

How to adopt skills-based HR practices (and why)

Step 1. Make skills a mindset 

The key to implementing a skills-first HR strategy is to embrace “skills-first” as a mindset more than simply an approach. While strategy and approach can be directed top-down, mindsets come from within and, at scale, enjoy the unique power of a grassroots movement. 

To do this, you need to deeply understand, internalize and communicate the value of skills so that your company adopts it not just as a strategy, but as a way of thinking about the world of work.

So what are some of the benefits of looking at your people, company and workforce planning through the lens of skills?

Skills-first mindset fosters a people-first culture

When you look at your workforce through their skills and not their job or title history, you are seeing a more comprehensive and humanistic profile of your employee. In 2022, skills encompasses a wide range of competencies, from the technical to the interpersonal to the “mad,” i.e., what previously might have been written off as a hobby but is now recognized as transferable talent. 

Looking at skills then levels the playing field for your people who may have different backgrounds or experiences, but nonetheless possess the attributes needed for a certain opportunity. Many skills-focused technologies can also level the playing field further by eliminating age or gender bias as well as the undue manager influence or word-of-mouth networks that characterize the old world of professional progress. 

Moreover, this way of thinking also helps your people see that they possess relevant skills as well: Employees – and sometimes even HR – often don't realize that the skills they have for one job can be easily transferred to another.

This culture of investment and empowerment also creates a people-first environment by fostering engagement. When people think first of their skills and not their past job descriptions, they are able to see a wider world of opportunities and paths for their future, which boosts enthusiasm and engagement in their professional project.

Your people will feel more valued and encouraged to apply to openings and you as HR will have a bigger, more diverse talent pool which in turn also makes your hiring more effective and improves retention — and retention is something quantifiable that you can show to your C-suite as a demonstrable effect on the bottom line. 

Skills-first mindset creates long-term employability

Your people will be better prepared for the future — and the present — when you think about their professional development in terms of skills. Skills-based HR strategy allows you to bridge skills gaps as they arise and on an individual or collective basis, as opposed to looking at them strictly when it comes time to fill a need.

Skills also help you fill hard-to-fill roles as, as mentioned, it opens up the talent pool and helps you look at jobs not as a strictly linear development but as the amalgamation of several skills. In other words, it helps you, as HR, realize the talent you have hiding behind job titles while improving your people’s employability as it recognizes the breadths of roles they can work in.

Long-term employability is encouraged because thinking about skills encourages employees and HR to envision and launch growth opportunities that previously might have seemed invisible or out of line.

Skills-first mindset is a modern, agile mindset

This is where we remind you that a skills-first mindset makes it exponentially easier to tackle the skills gaps of today and tomorrow.

But more than that, skills-based HR creates a company culture and strategic mindset that itself is fit for the present and the future. Which is to say, a skills-first mindset is the only mindset that fits the modern expectations of a career and recognizes the modern understanding of education models. A skills-first mindset does not rigidly ascribe to an old world of work that prioritizes certain institutions or certain career paths. Careers no longer exist only across positions and roles, but can quite comfortably span divisions and even industries. Your employees know this – your HR strategy should reflect it too.

Further, a skills mindset goes hand-in-hand with the agile growth mindset that allows and encourages your people and your company to evolve and change. Intelligence and capabilities, in the agile view, are not fixed points but themselves skills to cultivate. Failure and mistakes are part of the learning process and growth is a liberating, empowering process.

We don't need to tell you that in 2022, such flexibility and adaptability is absolutely essential to navigating the fast-changing world of work.

Skills-first mindset improves job and industry sustainability

For all the above reasons and more, thinking beyond job descriptions and rigid frameworks to a more flexible and inclusive skills-based view of your talent will keep your organization competitive and ahead of the curve.

It keeps your employees engaged in your company and their own development, and it democratizes opportunities to keep your culture, strategy and ideas fresh.

Finally, a skills-first mindset encourages the redeployment of talent across business units according to your people's interests and your business' needs, which keeps your company thriving longer.

All of these contribute to creating a more sustainable, future-proof company.

Step 2. Create a change management plan

Once you’ve internalized and communicated the benefits of a skills-based approach, it's hard to not want to jump right in and start changing processes left and right.

But successful implementation of a skills-based HR strategy can require major shifts in how you, your managers and leadership think about hiring and development. It's not always easy to change the way things have been done, especially when it threatens traditional sources of power. It will also require careful culture management as embracing skills over job history can be difficult for those who do follow a more lienar background to accept.

As for the brass tacks of implementation, your skills-first mindset is best paired with a roll-out strategy that clearly aligns skill development and focus with business objectives and offers a forecasted ROI that shows how the benefits can actually impact the bottom line. 

Balancing both change management and delivering an ROI is a big task. To this end, you may find it beneficial to use a solution with a support team who can help you navigate these changes with an expertise in both skills and implementation.

Step 3. Reframe your methodology (and update your tools)

Ultimately, your skills-first mindset won't do you a lot of good if you are still locked into old processes and structures that limit your ability to apply this approach to the lived experiences of your people.

You will need to create or use assessments at all stages of the employee lifecycle that not only prioritize skills and competencies, but also recognize the transferability of skills and the underlying commonalities. For certain roles and industries, diplomas and titles will nonetheless remain relevant but they should sit alongside skills assessments, endorsements and alternative methods for evaluating candidates. 

Recognizing all careers and jobs are a continuous learning experience, this mindset and view of your employees should continue after each position is filled.

Technology, then, is an invaluable ally at this stage, and you’ll want to choose an internal talent marketplace aligned with your values. AI-driven and skills-based talent marketplaces encourage both HR and your employees to stay engaged and think about career development as an ongoing, continuous part of the talent experience.

A skills-based HR strategy is not only the HR strategy of the future, but of the present. Understanding the value of skills and adopting a skills-first mindset is the first step, but transforming your philosophy into an actionable strategy requires a tool with skills woven into its DNA. Choose wisely and you can transform your people’s lives and the impact of HR at your company.

Want to learn more about how you can shift to a skills-based HR strategy? Get in touch with 365Talents today.