Is technology finally turning the skills-based organisation into a practical reality?
What is skills-based technology?
Deloitte's Hub and Spoke model defines skills data and technology as one of the four critical hub components (alongside talent strategy, a common skills language, and governance)1. Whilst the strategy should be established first to lay foundations, technology should always be a primary enabler of a skills-based approach. Skills-based technology considers how skills flow seamlessly through the talent processes using a robust talent technology ecosystem. At a high level, technology analyses the work individuals do to build their skills profile and combines that with emerging market trends and the external skills landscape to provide a macro view of an organisation's skills gaps. This is used to drive strategic workforce decisions.
Why is skills-based technology so relevant?
Keeping up with rapidly evolving technology requires new skills that are sometimes hard to anticipate, but increasingly important. Our research indicates that 61% of business executives say that a primary driver for adopting a skills-based approach is the need to adapt to the emerging skills required to harness new technologies. Technology is both a major driver of the need for skills, and enabler for skills-based transformations. Although 60% of business executives see fractionalising work into their constituent skills as the best way to organise work, only 18% of them say they have the necessary technology to do so2. This is where skills-based technology can help.
Where to start?
Embarking on a skills-based transformation can be daunting. Incremental changes through a methodical transformation roadmap suited to the organisational particularities is usually the best approach. To help shape the transformation, amongst the first activities is to define the skills-based technology landscape. Some organisations take a “HRIS-first” approach; Skills are a major focus for all three of the major HRIS vendors. Consequently, their respective roadmaps are full of exciting developments. Workday Skills Cloud delivers skills insights leveraging their vast user-base, SuccessFactors’ Growth Portfolio enables end-to-end skills-based processes such as skills-based learning, and Oracle HCM’s fusion of AI, Dynamic Skills, and Oracle ME places skills at the core of their offering. The “HRIS-first” approach has become increasingly appealing; however, it may leave organisations frustrated with the pace of change when they are dependent on a technology roadmap outside of their control, that can fail to deliver on initial timelines.
Other organisations take a “best of breed” approach. These organisations combine multiple cutting edge and emerging technologies, partnering with software providers who have tackled the skills question in an innovative way. Examples include Eightfold AI, launched in 2016 by two Google alumni3; and TechWolf, a skills intelligence platform, dedicated to helping “enterprises establish an automatic, instant and always up-to-date skills intelligence”. Another notable example is SkyHive who, at the time of writing, have recently been acquired by Cornerstone. Meanwhile, major established organisations such as SAP and Microsoft are also investing heavily in their skills solutions4. Microsoft announced Viva Skills in 2023, which leverages LinkedIn’s skill taxonomy and database derived from their large customer base.
While potentially appealing, the best of breed approach is best pursued once the HRIS foundations are stable. It is easy to make the mistake of investing in the latest emerging technology whilst basic data elements such as job architecture are improperly governed. The key to a successful skills tech transformation is to combine a clear philosophy around skills with a technology strategy suitable to the organisation’s culture and overall maturity.
How can technology be used to drive the shift to become skills-based?
Technology accelerates the path to becoming a skills-based organisation as it facilitates organisations to pilot and test hypotheses using a “safe to try” ethos. Piloting can be an effective way of making use of a smaller budget whilst developing a strong case for a more holistic investment in skills leading to a global rollout. Successfully implementing a robust skills technology ecosystem keeps the employees and the organisation informed about the available skills and opens the door to impactful and individualised learning and career progression opportunities. One of many technology providers with a focus on skills in the Talent Acquisition space is Eightfold. Analysis conducted by Eightfold suggests that one implementation of their platform led to an increase in internal hires by 81%.5, 6
Balancing the Power of Technology with the Risks
Embracing new technology comes with benefits and risks. One such consideration is the perception that employees may be uncomfortable with sharing skills data. Despite this, 79% of workers today are open to their organisations collecting data on their demonstrated skills and capabilities, and as many as 70% are open to data being collected on their potential abilities2. Nevertheless, workers’ concerns around the use of their data are increasing, and organisations will need to build and maintain trust with employees to continue a positive relationship between employer and employee.
Generative AI has great potential to elevate a skills-based organisation. Organisations are increasingly looking at using GenAI to interact with candidates as part of the Talent Acquisition process through the use of chat bots or co-pilot functionality. Similarly, inferring skills from organisation data such as job descriptions, is a good way of accelerating the engagement of employees with their skills profiles. New GenAI use cases are uncovered daily and 43% of CEOs have already invested in it, with another 45% planning to do so in the next year7.
Despite this great potential, each use case should be carefully considered. Using GenAI to match candidates to jobs without human intervention may lead to biases and discrimination, whilst negatively impacting an individual's career development, highlighting the necessity of human input alongside technology.
What does this mean for your business?
From curating the employee’s skills profile, to recommending suitable job opportunities, the emergence of new technology means that making the shift to skill-based practices has never been more achievable. Having a clear philosophy around how best to use skills, combined with employing technology to pilot skills-based practices is a good start in dialling up the skills lens. As the skills-based technology market evolves, success is dependent on shifting mindsets to support adoption.
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References
1 Skills Framework & Skills-Based Organization Agility | Deloitte US
2 Skills-based organizations | Deloitte Insights
4 Why Microsoft Viva Skills Could Disrupt The HR Tech Market – JOSH BERSIN
5 The Future of Work: Intelligent by Design | Eightfold.ai
6 Key metrics being tracked by strategic HR departments (eightfold.ai)
7 Five generative AI initiatives leaders should pursue now | EY UK
