In today’s ever-evolving business landscape, organizations are constantly seeking new ways to optimize their talent management strategies. One approach that has gained significant traction, focused on identifying and harnessing the unique skills and abilities of employees to drive success and unlock their full potential, is skills-based talent management.

Skills are becoming a critical factor in several small and large organizations: using skills allows them to identify the true potential of their workforce, make not-biased decisions based on gender, age, or nationality, and most importantly, it gives companies the ability to spot great talent in their workforce and accelerate their development. In a year where we have seen several companies reducing their workforce and doing their best to boost productivity, having a clear understanding of skills in your organization is critical to making the business more productive and capable of surviving in an age where customers’ needs are constantly changing.

I’ve seen the first examples of how skills could be used during COVID-19: many companies couldn’t easily pivot to digital strategies and implementing digital products because they thought they did not have the talent to do so. Some of them did have the talent to start the pivot, but they couldn’t identify it. Some other companies struggled to manage their workforce operations without skills: it was impossible to understand who could take over customers and tasks from other employees. Having skills mapped would have helped them find replacements almost immediately.

Today I am talking about skills-based talent management, a general intro to what it is and how companies of all size can start using it to accelerate their workforce development and therefore their business.

What is Skills-Based Talent Management

Skills-based talent management is a strategic approach that emphasizes the development, utilization, and alignment of employees’ skills with the organization’s goals and objectives. This approach recognizes that traditional talent management methods, which rely heavily on job titles and hierarchical structures, may not effectively tap into and leverage the diverse skills and capabilities that employees possess.

Skills-based talent management involves adopting a more holistic view of employees’ skills, beyond what is reflected in their job descriptions or resumes. It focuses on understanding individuals’ unique talents, competencies, and potential contribution to the organization. By recognizing and valuing the breadth and depth of employees’ skills, organizations can create an environment that fosters innovation, collaboration, and growth.

The rise of skills-based talent management can be attributed to several factors, including the changing nature of work and increasing expectations of employees. Organizations today need agile and adaptable employees who can quickly pivot and acquire new skills to meet evolving business needs, and this approach to talent management enables them to identify individuals with the right skills and provide targeted development opportunities, aligning talent with strategic objectives. Employees are no more just defined by their job titles or the tasks they perform, but by the unique skills and capabilities they bring to the table.

This is a representation of how skills are organized inside the Anthropos’ taxonomy. Our database has more than 200,000 skills and 18,000 job roles. Companies will find a large variety of soft and hard skills for several industries and departments, but they can also personalize their skills. The great advantage of adopting skills is actually that you can personalize an existing taxonomy and define how the system needs to recognize and use your custom skills. This is particularly useful to engage your employees as well: they will put more effort into upskilling and validating skills that are directly connected to their job and company.

The role of skills-based talent management in transforming your company

Unfortunately the talent and skills industry is somehow very difficult to understand and there is a lot of enterprise jargon out there that doesn’t help. I have personally seen how adopting skills-based talent management practices inside a company can make it faster and more capable of competing in the market. I talk a lot about competition because that’s the first advantage you get when you invest in developing your workforce with new skills: your business becomes more competitive in the market because your people can do a lot more (and faster sometimes) than before and are capable of constantly adapting your product or services to the new market needs. 

Every company faces competition, eventually. Mostly because every company needs to deal with technological changes and globalization. 

I am sure you have been reading tons of articles talking about skills-based talent management that failed to explain what practically means to implement skills and what are the real advantages for a company.

Let me try here giving you a set of examples of what companies are facing today and how skills-based talent management could help with each single one.

• Every company is a digital company, but not every workforce is digital

What I mean with this is that we expect every company today to be digital in their products, services and processes. But unfortunately not every workforce has the skills and competencies to transform their business into a digital one. I don’t want to bother you with the classic “digital transformation” we have heard about so many times. 

Adopting a skills-based approach helps companies spot who in their workforce has digital skills (or even better, has used them in the past for other companies) and helps create paths to quickly upskill the workforce at different levels. Not everyone in the organization might become an expert in cloud, but your sales people might become familiar with digital sales and digital marketing (just to make an example).

Moving to skills-based talent management helps organizations truly move to digital and constantly upskill/reskill their workforce without the need to hire new people or expensive consulting firms. 

• Skills shortages and internal development: hiring is becoming incredibly expensive and competitive

This is not true for every industry, but in many skills shortages are a brutal reality. Companies cannot grow because of the lack of skilled employees. Think of automotive, manufacturing and retail companies: from Europe to the US, I can think of at least 2-3 companies in each category that have skills shortages. 

Could they go and steal those people from competitors? Yes, in most cases, but at an unsustainable price. That is true for blue collar workers but also for skilled technicians and for managers and directors. 

This is a use case where adopting talent management based on skills could allow them to identify their best talent and build skills-based paths to bring them into new roles and develop the skills the business needs. It’s a great opportunity because it gives companies the ability to hire more junior professionals and transform them inside the organization while using their soft-skills and their motivation as great indicators of their ability to grow and acquire more technical/hard skills. 

Think of a company that can use a skills-based talent strategy to develop every year 100+ new employees that will be trained for technical roles. The cost of doing that is a lot more manageable than 1) finding the same people in the market and paying higher salaries 2) stealing those professionals from competitors. And the best thing is that you can train them while they are doing other roles inside your company.

• Generations are changing and so are customers

This is particularly interesting because new generations challenge companies on two fronts. On the hiring front, where companies can use skills-based hiring to provide a modern and less-biased hiring process. And of course on their market where products and services that have been successful for decades need to be redesigned for the needs of modern negerations.

• How people are thinking about work has changed after COVID

If you talk to entrepreneurs and HR leaders across several industries they will all agree on how people have changed their relationship with work and career after COVID: for many of us priorities have changed and work is not at the top of them any longer. Among the many ways this is manifesting inside organizations, it’s more and more evident how workers don’t want to work for companies that don’t invest in their growth and development. 

That’s why using skills-based talent management is a great opportunity to structure career paths inside your company and use them to retain your best talent and give them real incentives to grow that are aligned with your business. 

• Managing turnover and replacements is particularly hard in some industries like retail 

Now, the changes in the way people have been thinking and looking at work and careers after COVID have a particularly hard effect on some industries like retail. Some of our customers at Anthropos are big retailers that are struggling to reduce workforce turnover and attract people for their stores. Economic incentives are not as effective as they used to be and several companies are embracing skills and skills-based talent practices to retain their best people and let them grow inside their organization. 

• Technology is forcing companies to constantly invest to stay competitive 

I think nothing like Artificial Intelligence (AI) can explain this point. In 2023 we have seen AI becoming a major trend thank to generative AI being used in more and more companies. The reality is that for the last 20 years we have seen several major technologies changing how we work and how companies need to do business and this trend will accelerate. Adopting skills and map your entire organization with skills allows you to quickly identify the employees that are embracing change faster than others and “use them” to bring that change to the rest of your workforce. It’s also much easier to upskill your people to adopt these new skills with a proper program that shows you progress over time.

• Hiring and growing talent in depressed areas/regions

Can you build a thriving business in a region that doesn’t have the best universities and talent all around? Yes. Many companies have done it over the years and have used this as a strategy to have lower costs but invest a lot more in their people. What companies can do with here with a strong skills-based talent management strategy is to build a real process inside their organziation to constantly develop their people with the skills and roles they need. This obviously requires a lot of work but can also save the company a ton of money and increase its ability to scale the business with new skills and abilities that would be difficult and expensive to find in the market.

How to Implement Skills-Based Talent Management in Your Organization

Now that the significance of skills-based talent management is evident, organizations must understand how to implement it effectively within their own contexts.

Implementing skills-based talent management involves several key steps. First, companies must assess the existing skills landscape within their workforce. At Anthropos we call this skills mapping and it’s probably the most important step to start with. Companies are usually doing this in a variety of way: in my career I’ve seen many relying on consulting firms to do survey-based skills mapping with their employees. In other cases everything was ultimately based on a set of quizzes and self-evaluated skills. There are several methodologies, some of them are better than others. In our case we think skills mapping should be a mix of tech and self-evaluation to start, and we have engineered our technology to let companies map all their employees in a matter of hours instead of months.

Skills mapping includes evaluating current skill sets, identifying gaps, and determining the skills required to achieve organizational objectives. By conducting a thorough analysis of the skills possessed by employees, organizations can gain a comprehensive understanding of their workforce’s capabilities.

Once the skills landscape is understood, organizations can develop targeted training and development programs to bridge any gaps and align talent with strategic goals. These programs can take various forms, such as workshops, online courses, or mentoring initiatives. By providing employees with the necessary resources and opportunities to enhance their skills, businesses can empower them to contribute to the organization’s success. Something I love is the idea of giving your employees clear and defined career paths: they combine the advantages of having a well defined development program with the ability for the employee to really see a future inside the company and therefore invest in it. This is a great way to increase retention. I’ve given several example of this in our guide about software engineers retention. And of course, if you don’t have a career path in your current job, I would absolutely ask for one to my manager!

One common challenge that skills based talent management may face is resistance to change. Some employees may be hesitant to embrace a new approach that emphasizes skills over traditional job titles. To address this, the benefits of skills-based talent management should be clearly communicated internally and employees should be involved directly in the process. By explaining how skills-based talent management can lead to personal growth, career advancement, and increased job satisfaction, organizations can alleviate concerns and foster a positive attitude towards the new approach.

It’s mostly about building a supportive culture, one that values and rewards skill development can also help overcome resistance and enable successful implementation.

The Future of Skills-Based Talent Management

As organizations continue to adapt to the digital age, skills-based talent management will play an increasingly critical role in driving success. It is important to stay informed about emerging trends and be prepared for the future.

With technological advancements and evolving work environments, new trends are shaping the future of skills-based talent management. One emerging trend is the use of data analytics to identify and predict skill gaps, while another one that is definitely on the rise is the integration of artificial intelligence and automation in talent management processes, enabling organizations to match employees’ skills with the right opportunities and streamline talent acquisition and development. At Anthropos we are working on evolving the way companies are managing skills inside the organization and develop their workforce. In the last months we have been working on our offer, including Job Simulations, to connect AI and skills, and present new way of developing people at scale.

Skills-based talent management is a potent strategy that unlocks the potential of employees and propels organizations towards success. By recognizing and harnessing the unique skills and abilities of individuals, organizations can enhance employee performance, fuel business growth, and stay ahead of the competition in our dynamic world. As we look to the future, skills-based talent management will continue to evolve and play a pivotal role in driving success.

I am happy to hear what you think about implementing skills inside your organization, feel free to leave a comment!

Stefano