Skills-based organisation: the modern approach to workforce planning

Skills-based organisation as a key factor for success

The concept of skills-based organisation (SBO) might be new, but it is already playing an important role in recruitment in UK businesses, as illustrated by the Mercer study Global Talent Trends 2024. The internationally active HR consulting firm spoke to HR leaders and employees to see how they are navigating the changing world of work. Of the people they surveyed in the UK, 57% said that improving workforce planning was a top HR priority, with 35% believing that talent processes need to be designed around skills.
 

What is a skills-based organisation?

A job in the traditional sense is one single activity performed in isolation. Each job comes with a set of tasks and responsibilities that are worked out, managed, administered and supported by the HR department. But businesses are increasingly moving away from this traditional view in favour of skill management. This means they consider professional roles a way to combine their employees' skills. Instead of reducing employees to one single function, they see them as individuals with specific qualifications and skills.
But what does that mean in practice? In a skills-based organisation, the specialist knowledge required for a task or assignment is described as a skill. Skills include operational competences, abilities and knowledge. This perspective helps employees to leverage their existing skills or to upskill and diversify their job opportunities.
 

What are the benefits of a skills-based organisation?

The paradigm shift to a skills-based organisation offers significant advantages to businesses across nearly all industries.

●        Greater flexibility: progressive skills-based organisations recognise the need for individual skills amid fluctuating supply and demand, so they foster a dynamic workforce capable of rapid upskilling.

●        Fewer silos: rigid hierarchies have no place in a skills-based organisation. Instead, talent flows freely throughout the organisation, which in turn enables more frequent cross-functional communication. This approach also prevents important knowledge from becoming trapped in a particular team or department.

●        Higher productivity: separating work from jobs lets employees use their skills flexibly throughout the business and allows dynamic skills-based organisations to make full use of their workforce’s potential. It also encourages employees to use their skills in projects in different departments.

●        Faster processes: using the skills of existing employees and freelancers is quicker and easier than finding and hiring new staff.
 

How does a business become a skills-based organisation?

The transition involves several steps.
A crucial first step is to reach a common definition of skills. In the context of talent, skills mean qualifications that individuals have or can develop over time. It is important to clearly differentiate them from other skills. This is the only way to see which specific skills are available to the business.
After taking stock, a business must clarify which skills can be utilised and how in order to provide an economic benefit. The HR department must help the business define the added value of this approach, for example by answering the following questions:

                                  ●        Why do we think a skills-based approach is right for us?

                                  ●        Which business issue do we want the skills-based approach to resolve?

                                  ●        How will we know if we have been successful?

                                  ●        How is this different from what we do today?

If these questions produce clear answers, you can use them to determine criteria for success. You then need to show whether implementing the approach delivers the intended result.
When SBO breaks down work into smaller parts, you will need a way of managing these segments. This is where a digital platform comes into play, like a talent marketplace where technology assigns employees to suitable projects, tasks and mentors based on their skills, ambitions and availability.
 

Summary

Businesses must respond flexibly to constantly evolving business segments and the ongoing shortage of skilled workers. One way of dealing with these challenges is to switch to a skills-based organisation. Skill management, i.e. dividing up employees according to their individual skills, enables rapid and targeted workforce deployment. This often means there is no need for lengthy application processes for new hires. Instead, businesses can search their existing workforce to find specific staff for certain tasks. This makes them much stronger, as the study Building tomorrow's skills-based organisation by Deloitte reveals. Key fact: SBOs are 63 percent more likely to achieve their targets than other businesses.