Status of skills-based organizations: Where do they stand today?

If your organization adopts a skills-based approach, Deloitte research has found, you’re 107% more likely to place talent effectively and 98% more likely to retain high performers. In a world where attracting and retaining talented workers is no guarantee, the skills-based organization (SBO) model is a proven, practical solution.

We’re devoting a three-article series to the SBO. In this second article, we’re moving on from describing slow and/or sporadic adoption of the model in the early 2020s, to exploring how more organizations are now applying structure to their strategies, incorporating custom tools and AI, and consequently exposing a more resilient path forward.  

The SBO model in action

We’re comfortably past the early SBO adoption years and observing far fewer companies still hyper-focused only on building skills libraries. Many have realized the necessity of a big-picture approach, and are now treating skills as a data point that reveals insights and drives decisions regarding talent.

But although interest in the SBO model is high and many implementation journeys are in full swing, maturity varies widely. We’re still seeing some teething pains in terms of: HR and business functions using different skills taxonomies, skills “language” and value measures; ambiguous ownership of skills data and process governance, accountability gaps and persistent siloes; and change fatigue brought by new roles, technology and frameworks.  

Role of technology and vendors

The vendor landscape that supports SBOs has exploded over the past five years. Today, companies enjoy an extremely broad range of solutions to help optimize operations and provide workforce insights using skills-based data. But this glut of options doesn’t come without challenges. 

Traditional tech and skills-specialist tools
Many technology vendors are competing, as well as acquiring each other and forming a partner marketplace for skills-specialist tools, breeding confusion.

Existing HR suites are increasingly including skills functionalities, making the need to move to skills-specialized solutions less urgent. Comparing those suites to point solutions, we’ve found that specific skills functionalities are better in tools from vendors like Eightfold, SkyHive, Gloat, Fuel50, Retrain.ai and TechWolf, but they add integration complexity. Suite vendors like Workday and SAP SuccessFactors have created a middle ground for this to work with certified skills intelligence partners .

Any time new tools are introduced, technology fragmentation can result. The problem could be limited integration across the HR tech stack, or too many tools leading to poor interoperability, or overlapping skills functionalities from the various tools. HR tech leaders are all too aware of these challenges, and it’s common to feel decision paralysis about choosing the right “stack” out of so many options.

Technology choices are necessary to realize SBO goals, and Deloitte’s partnerships with vendors help us to help you integrate technology and give pre-selection advice. We start by evaluating your organization’s tech landscape, which informs selection and integration guidance based on your unique use cases. This kind of decision making can potentially save you thousands of euros/dollars and ensure resilience as your SBO strategy matures.

Generative AI and the SBO
Generative AI is rapidly becoming the cognitive engine of the SBO. It doesn’t just automate skill tagging or matching – it continuously senses, interprets and predicts workforce capabilities in motion. By mapping emerging skills to evolving work, GenAI enables organizations to dynamically design roles, personalize learning and anticipate workforce shifts.

But AI’s power only translates into impact when it fuels a connected skills intelligence ecosystem that blends skills data from learning, talent acquisition and performance systems. GenAI provides the intelligence layer, and human judgment provides the wisdom layer. Human capability isn’t replaced but amplified, as static job data feeds a living, learning skills network.

Because AI-driven insights are only as good as the data and governance that shape them, human interpretation is necessary. The most successful SBOs bring together managers, HR and employees to validate insights, debate implications and co-create skill strategies.

A guided approach

Whether you’re staring at a messy network of existing tools or a sea of options from which to purchase, expert guidance is invaluable. This is true for any of the eight “pillars” of the SBO journey shown below.

The key is customization of each journey according to your needs, appetite and maturity. If funding or weak buy-in prevents your organization from committing fully or permanently to a SBO transformation – or if you’re just feeling overwhelmed by the prospect of a full skills transformation – running a pilot is a great way to test the waters and drum up stakeholder enthusiasm.

SBO clients in the spotlight

Let’s cast a spotlight on how we’ve been guiding a few SBO journeys after assessing the state of each organization, for clients that span a wide range of maturity levels and outcomes:

Major biopharmaceutical company
This organization embarked on a multi-year journey to build an SBO, beginning with a pilot across three business domains and three priority talent processes: recruitment, learning and internal mobility. The journey started with a clear business case, defining the SBO vision, desired outcomes, and a quantified cost-benefit analysis to demonstrate enterprise value. We supported them with the full suite of services, including helping with SBO design choices, developing the enterprise skills taxonomy, mapping jobs to skills, assessing skills, redesigning core talent processes, managing change and integrating skills into the broader talent management ecosystem. By 2027, the organization is projected to achieve multimillion-dollar workforce cost efficiencies and significantly greater agility through a skills-based operating model.

Bank
One of the world’s leading financial institutions embarked on early experimentation with a skills-driven internal mobility model. Their aim was to gain enterprise-wide visibility into skills supply and demand, and build workforce resilience for the future. We partnered with them to define the business case for change, develop an enterprise skills taxonomy and framework, identify and assess critical skills, and manage end-to-end SBO implementation and change adoption. These initiatives are laying the foundation for scalable internal talent mobility and a data-driven skills-based operating model.

Insurance provider
A top global insurance company is embedding skills into its workforce planning agenda and engaged us to shape its SBO vision and make critical strategic design choices. We facilitated an Art of the Possible workshop to help leaders envision the future of work, define guiding principles and align on the target state for a skills-driven enterprise. Our team assessed the current technology landscape, evaluated shortlisted platforms and provided a structured comparison of options – highlighting pros, cons and integration implications. This enabled the client to select the most suitable technology stack aligned to their prioritized use cases and accelerate their transition toward a skills-enabled workforce planning model.

Food and beverage company
A global food and beverage leader set out to scale its skills taxonomy and governance framework across the marketing function, linking it directly to learning and career development. The objective was to define the EMEA marketing team’s technical and functional skills, to better align with the company’s Marketing Academy and enable greater career mobility. We supported them through a comprehensive job architecture assessment, development of role-specific skills profiles and mapping of skills and proficiency levels across roles. The outcome was a complete, structured marketing skills library that now serves as the foundation for capability building, learning design and internal mobility.

Work in progress

The success these companies are experiencing as they move toward an SBO future has confirmed the importance of articulating strategy and receiving expert advice.

Some areas for improvement have also been exposed. An overzealous approach has led to over-engineering, HR tech buyers have missed the mark, or technology has been prioritized at the expense of change management. Other challenges arose when a client lacked a fundamental reason to become an SBO, or when leadership changes diminished support for the SBO model. We also observed staff who were reluctant to assess their skills because there was a lack of clarity about what the results would be used for; they feared being judged based on such an assessment. 

The work ahead

Reflecting on the state of SBOs today, we’re proud to see a move from conceptualization to execution. But – just as our previous article revealed – it’s still worth recalibrating your SBO lens as implementation progresses. Scaling your SBO efforts and embedding them organization wide requires systemic shifts as you align technologies, assign governance principles and manage the cultural shake-ups. If you’re struggling with any of these challenges or others, look for our next article about what it takes to move from SBO pilot to lasting implementation and undeniable results.