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Making sense of skills strategy

I spend a lot of time talking to people about skills strategy and one thing is certain: confusion and FOMO abound in equal measure when it comes to this topic.


In this blog, I’ll discuss some of the hype around skills, what we mean when we talk about skills-based organisations and I’ll offer a few suggestions for making sense of skills strategy as it applies to your world. 


Signpost showing different directions

So what’s the big deal?

Skills have always been important, but they’ve jettisoned onto the boardroom agenda in two significant ways. 


The skills gap as a strategic priority

Firstly, we have significant skills gaps - a mismatch between what people can do and what they need to do, both today and in the future. 


According to Manpower’s Annual Talent Shortage Survey, 75% of employers report difficulty in filling roles. This is up from 45% in 2018. One of the factors impacting talent shortages is the lag between skills development and the rapid pace of technological change. We are simply not developing skills fast enough! 


The World Economic Forum Future of Job's report refers to an anticipated structural labour market churn of 23% of jobs in the next five years. Essentially this means that some jobs will disappear (most likely clerical, administrative jobs) and some jobs will be newly created (most likely in technology and sustainability). According to the same report by WEF, 44% of all workers’ skills will be disrupted in the next 5 years, and 6 in 10 workers will require some level of training.


With so much churn anticipated, it’s not surprising that skills development is a top concern amongst executives who want to understand the skills that exist in their organisations today, and the skills they need for the future. 


For both the learning technology sector and the learning professional, this presents significant opportunities to innovate better ways to identify and close skills gaps. 


The skills-based organisation as a competitive advantage

The second factor driving the skills hype is that AI offers the possibility of fundamentally rethinking the modern organisation, with a shift from jobs to skills as the primary currency of work. 


In the skills-based organisation, we start to examine both jobs and employees through the lens of skills, as follows:

  • A job can be deconstructed into a granular set of skills that comprise the abilities needed to do that job effectively. 

  • An employee can be understood as an individual with unique talents, including skills that reside outside the confines of the current job. 


This skills intelligence empowers organisations to fill emerging talent requirements from non-traditional sources externally or internally. In the illustration below, we can see “skill adjacencies” between the role of Learning Designer and the role of the Prompt Engineer. Both jobs hypothetically share three common skills and in order to close the gap, a Learning Designer would need to develop three new skills (Skill X, Y and Z). 



Diagram showing two jobs - the learning designer and the prompt engineer. Both jobs share some of the same skills.


With this granular-level intelligence, employees can contribute value to the organisation beyond the demarcation of the traditional organisational chart, and organisations can rapidly deploy resources to where they are most needed, thereby becoming more responsive and more competitive. 


Big questions

Skills-based practices are far-reaching, potentially influencing every stage of the talent lifecycle including hiring, compensation, strategic workforce planning, learning, career development, succession planning and so on. It’s complex, cross-functional and the supporting technologies are constantly evolving. In short, there is no playbook to follow and this raises some big questions.


The two questions I’m hearing most often are: 


  • What is my role in skills strategy?

  • How do I get started?


1. What is my role in skills strategy?

Skills strategy raises a number of conundrums, not least around role clarity. When facing complexity and change, we seek comfort from knowing the scope of our role. Unless your organisation has formally appointed someone to lead a cross-functional skills effort, it’s unlikely that you’re going to get that clarity. 


It's early days for many organisations, so I’d encourage you to let go of the idea of any one individual or function owning the entire strategy (for now). With such broad application, it’s feasible that any member of the HR function, or indeed any business function, is experimenting with skills strategy. And in reality, several initiatives may be happening in parallel. 


The key word here is experiment! I’d encourage you to consider yourself an investigator or an entrepreneur! Your role is to experiment with ways to create value using skills-based practices. 


I'd also guide you to look at skills-based practices only if they can solve a problem for your business. And start with that problem! Which brings us to the next section 👇 


2. How do I get started?

With something as complex as skills, it’s very easy to get lost in skill frameworks, vendors, research reports and so on. 


I recommend getting grounded in the here and now by considering how you can create value or solve today’s problems using skills-based practices. 


Here’s a selection of value-generating starting points that have come from participants in my Skills Strategy Accelerators:


  • Reskilling and redeploying workers from (declining) Job A to (in-demand) Job B. 

  • Improving employee sentiment data around perceived lack of career opportunities in one part of the business.

  • Testing an off-the-shelf skills framework with a group of internal experts to see if it can be leveraged for skills assessment.

  • Trying skills-based hiring for one role in Region A and compare against traditional methods for hiring the same role in Region B.


I’d encourage you to read the World Economic Forum’s recent report, Putting Skills First - Opportunities for Building Efficient and Equitable Labour Markets which contains a series of use cases for inspiration. You’ll notice that not too many of these "Skills Lighthouses" are trying to solve the entire skills conundrum in one fell swoop … instead they are experimenting with value-generating activities. 


Incremental value wins the day

Regardless of the maturity level of your skills effort, an incremental “test and learn" approach will yield more progress than attempting to design a solution for every facet of the complex world of skills. As for FOMO, it's early days. Some of the biggest corporations in the world haven't nailed their skills strategy yet, so take some pressure off and start by finding ways to generate value today, one problem at a time.


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