Increasing threat and volatility has led to increasing Defence spend. Chief of the General Staff (CGS) of the British Army is committed to doubling lethality in 3 years.¹ The focus tends to be on acquisition of equipment, and on building digital/AI capability – but what about the human capability needed to acquire, build, operate, manage and lead? How will Defence organisations ensure they have the right people with the right skills² to respond to the challenge?

The UK’s recent Strategic Defence Review³ makes it clear that people capability is equally critical:

Defence needs a dynamic ‘blend’ of Regulars, Reserves, and civil servants to give it the mix of skills, experience, and strategic depth required in response to the threats of this era. This blend will need to evolve over time as threats, warfare, and technology evolve. This demands high-level workforce planning and development in support of Defence outcomes that is ‘whole force’, outcome-focused, and skills-based.⁴

The risk is that Defence lacks the ability to put the right people with the right skills in the right place at the right time – frustrating in business as usual, dangerous on a war footing. This is the lived experience in many Defence organisations. Often this is viewed as a problem of quantity (trained strength in the regular armed forces), to be addressed through recruitment and the training pipeline. There is another, more complex, view emerging across Defence that the problem is a limited ability to understand, access, develop and manage the whole workforce informed by good data on skills demand and supply (at individual and group levels). Solving this problem will help to unlock the human capital needed to expand Space, rapidly scale AI and Cyber capabilities, and address other key skills areas such as Nuclear.⁵

In a crisis situation, skills-based data, processes and tools will allow defence organisations to mobilise quicker, draw from a broader base of suitably qualified and experienced personnel, and plug capability gaps faster. Defence needs to more agile and responsive in how it manages its people capability, because the world is less predictable and the speed of technological innovation is ever increasing. In the short term, this means drawing on the whole workforce to fill urgent gaps, with an understanding of the skills needed and skills available. In the medium term, it means understanding broader skills gaps in the organisation and responding with training interventions. In the long term, it means seeing the future workforce demand through the lens of skills and building a workforce with the agility to meet that demand.

This is a transformation vision, aiming to unlock people capability across Defence. It can shift the paradigm away from more rigid rank, service, and accomplishment-based decision making – to resourcing, training and workforce planning decisions informed by skills demand and supply.

The Challenge:

A Skills Based Organisation approach responds to four interconnected challenges:

• Challenge 1. A heavily segmented Defence workforce, locked into silos. In contrast with the gig economy dominating some industries, Defence mostly operates as a ‘closed workforce system’ which is ‘bottom fed’, growing its human workforce in silos which have historically acted as a proxy for families of skills (e.g. cap badges, trades or branches). This made sense in a world with larger armed forces and more differentiated job requirements, but now it can be a barrier to flexible use of human capability.⁶
• Challenge 2. New, and rapidly changing, skills requirements. New threats, new technologies, and new ways of organising work demand much greater agility in response to changing demand for skills (more informed, faster decision making and faster outcomes). Because Defence largely ‘grows’ talent rather than recruiting externally, this means the training pipeline needs to be targeted and geared at a different pace.⁷
• Challenge 3. Retention, particularly in the regular military. Many talented people want more visibility, more choice and more empowerment in developing their careers than the current military talent system easily offers. Individuals want the opportunity to develop in-demand skills, for themselves and for the benefit of Defence. There is strong demand for specialist career pathways, and for the option of greater stability (for a time during a career).⁸
• Challenge 4. The Defence workforce ecosystem includes regular and reserve military, civil servants and contractors from the network of Defence suppliers. Each part of the workforce has its own value proposition, and individual characteristics. Together they make up a human system delivering Defence outcomes. Across this human system, there is a remarkable range of skills, and commitment to the mission. We need more permeability across the boundaries of this workforce ecosystem, so that Defence can build, retain and use the widest range of skills.⁹

What is Skills Based Organisation, and what does it mean for Defence?

Skills Based Organisation thinking has emerged from the private sector, where it often connects with ideas like ‘the end of jobs’ and the gig economy.¹⁰ Private sector organisations use a skills taxonomy to segment the work, and find the skilled people to deliver work inside or outside the organisation, in a dynamic talent marketplace.¹¹ Intel, for example, set out on a Skills Based Organisation journey with the goal of ‘Organizing like work across the organization, into a standard framework, to enable more effective management of talent.’¹²

We have been working with Defence organisations around the world to adapt and develop Skills Based Organisation concepts. Defence is different, primarily because the military workforce is grown internally and moved frequently to respond to changing demand. It also must operate a strict command and control system with decision making handed down the organisation based on rank – and the workforce structure geared to create a pipeline of people with potential to reach senior leadership ranks. There is as much, or more, focus on developing the people as on delivering the work. In this unique Defence context, Skills Based Organisation means establishing a common language by which different parts of the organisation (or enterprise) can understand demand and supply of skills – at the individual, team and organisation level – and use this to make decisions to manage the workforce. In practice, that means creating and maintaining a skills taxonomy¹³, governance, policy and tools (including modern HR systems) for matching people and jobs, unlocking career options, strategic workforce planning, and setting demand for future skills to gear the training system.

The Way Forward

There are a number of potential paths to a skills-based approach, with the right one for each organisation dependent on context and opportunities. The figure below shows one of these paths and the benefits at each stage.

Beyond Phase 2 in the graphic, the applications of Skills Based Organisation (and potential benefits) open up further, unlocking options such as:

• Using skills as a currency (taxonomy) to unlock new ways of designing and operating a human & AI workforce, recognising the need to pair AI ‘workers’ with appropriately skilled human decision makers and operators.¹⁴ AI raises questions around the necessary size, shape and skills mix of the human workforce – and a skills-based approach is an essential tool, giving Defence the structure and agility needed to adapt.
• Incorporating a ‘surge’ contractor workforce (like Reserves but broader) with the ability to leverage staff at key industry partners or other government agencies if needed to meet wartime requirements.
• Offering zig zag careers, with entry and exit points for Defence employees to readily rotate into industry and vice versa, and lateral entry, bringing leading-edge technology insights, particularly in space and cyber domain work. This also supports a broader view of ‘career pathways’, recognising that individuals may want to continue supporting the wider Defence enterprise without continuing to serve in a full-time military role, and enabling more agile and adaptive careers that move with both individual capability and organisational need.
• Expanding the available labour market for Defence roles, such as indigenous communities, remote workers, and workers with disabilities, who may not meet some of the preconditions for standard military recruitment (or may have changed status), but offer critical skills and could release additional capacity in the Defence workforce, while creating a more inclusive and diverse workforce.

How to build and sustain a Skills Based Organisation

Transformation of this scale needs to be centrally led, and programmatically driven. Strong leadership is needed to set a clear vision, drive design coherence, build ownership in the chain of command, and navigate with agility in a volatile operating environment.

In the UK, there is a centrally driven programme (the Pan-Defence Skills Framework) and a number of interlocking programmes of work across the wider landscape. The foundation is still being built; some good progress has been made. There is no model to follow, no off-the-shelf tech solution that Defence can ‘adopt’. It is a transformation journey that ‘has forced the Army to think differently about the way it manages its people’ (Programme CASTLE, British Army). With key parts of the foundation in place, a new talent management system is taking shape in the Army, RAF, RN and other parts of the Defence system.¹⁵

Based on experience with Defence organisations on this journey, we have identified key success factors:

1. Think strategically from the outset; maintain leadership focus

• Start with a clear, focused vision and strategy, with clear priorities for outcomes, e.g. more efficient redeployment (organisational) and improved e (individual) – to enable ‘choice making’ at key points in the journey.
• Think differently about skills-based careers, using transferable skills across the workforce, and targeted re-training to close skills gaps. Explore goals such as offering greater flexibility to specialists, creating tailored career pathways, fully leveraging the workforce ecosystem or implementing zig zag careers.¹⁶
• Develop MI/analytics with a dynamic understanding of supply/demand to make decisions about shaping the workforce for the future. Skill density analysis can reveal net supply (e.g. sufficient or over supply of particular skills) or demand (e.g. shortage) positions, from which to influence training system interventions, recruitment, role redevelopment etc.

2. Make it easy, make it sticky

• Exploit AI to accelerate development and minimise manual effort, including drafting a skills taxonomy, populating job descriptions and recommending skills against individuals’ profiles. However, always design a ‘human in the loop’ to add judgement and perspective. (For example, the UK Defence Nuclear Enterprise used Deloitte-developed AI tools to accelerate the writing of nuclear skills and job descriptions, followed by workshops to refine and finalise the products.)
• Invest early in making it stick: like any culture change, ownership throughout the chain of command is critically important. Everyone will need to adopt skills-based approaches in day-to-day, week-to-week management of people and planning of careers (e.g. keeping Skill Profiles up to date, incorporating in performance conversations). Conversations about increased agility and speed must come with a sober assessment of risk appetite. Resist temptation to over assess, quantify, and regulate to the point where the burden outweighs the benefit, and means that individuals do not invest in maintaining their own data.
• Make it easy to adopt and sustain: the skills framework needs to be ‘alive’ (and well governed) and not too detailed, so it continues to evolve to reflect emerging requirements, and creates a common language that is interoperable across the enterprise and/or wider industry ecosystem, to promote greater talent mobility. Experiment with the level of granularity of the skills taxonomy – balancing accuracy with ease of use and interoperability. Recognise but do not worship the unique requirements of each occupation (extends to military vs civil servant), balancing functionality with speed.

3. Build the right team, with the right approach, to drive transformation

• Model a skills based approach: create a flexible transformation workforce, drawing on a range of different skills as needed at different phases.
• Make informed decisions and choices as the operating environment changes: take a dynamic approach to problem solving, exploring options from all perspectives.
• Use a conditions-based campaign approach to govern progress, focusing on outcomes not timelines.
• Maintain a long-term focus on delivering an enterprise solution (pan-Defence, embracing the wider ecosystem) despite shifting sands. Establish a strong Design Authority linked to key decision making bodies that can corral related initiatives and integrate them for maximum benefit.

Conclusion

Defence organisations in several countries are exploring or implementing a skills based approach, with particularly advanced programmes of work in Australia and the UK.¹⁷ It is a significant transformation, and not quick, but the development of AI tools and other enablers is reducing the time and effort required. In our view, this is a critical piece of the solution to the challenges set out in the UK’s Strategic Defence Review 2025, and similarly facing other nations and our collective defence organisations (NATO, AUKUS etc) in this unsettled time.