Navigating the shift to a skills-based organization

As the concept of a skills-based organization gains traction, McLean & Company, a global HR research and advisory firm, clarifies that transitioning to this model involves more than just updating existing talent acquisition and management strategies.  

Making talent decisions primarily through the lens of skills demands significant resources. 

In their new thought leadership resource titled ‘What It Means to Become a Skills-Based Organization,’ the firm highlights that while adopting a skills-based approach can enhance employee retention and organizational agility, most organizations are not prepared for such a transformation.  

They emphasize that shifting to skills-based decision-making involves a deliberate and challenging process, requiring HR's support to make well-informed decisions tailored to each organization's unique requirements.   

McLean & Company, which is part of the HR division of Info-Tech Research Group, describes a fully skills-based organization as one that “makes all talent decisions through the lens of skills and skills intelligence.” 

Skills intelligence involves identifying, developing, and utilizing abilities at individual and organizational levels. Although this model is highly agile and capable of quickly adapting to change, transitioning from a traditional job-based model necessitates a complete rethinking of how organizations perceive work. 

  Jodi Callaghan, director of HR Research and Advisory Services at McLean & Company, points out the crucial role of HR leaders in determining the feasibility, appropriateness, and scope of transitioning to a skills-based model.  

“HR leaders are influential decision-makers regarding the feasibility, appropriateness, and scope of a skills-based transformation,” Callaghan explains.  

She notes that while the concept of a fully skills-based organization remains more theoretical, existing operating models range from traditional job-based to skills-aware, with the latter being a more achievable step for many organizations aiming to increase their focus on skills.   

The firm's new resource is organized into four distinct sections to assist HR leaders in navigating the path to skills-based decision-making:   

• Overview: This section introduces the theory behind skills-based organizations, the spectrum of operating models, and identifies the organizations best suited for this transformation. 

• Draws and Drawbacks: It highlights factors driving the re-popularization of skills-based organizations and potential unintended consequences of this shift. 

• Obstacles to Transformation: The third section discusses the challenges of evolving along the skills-based spectrum and offers proactive strategies for addressing these obstacles. 

• Visualize the Future: The final section poses questions to assess an organization's readiness for transformation, provides examples of effective skills-based practices, and lists essential conditions needed for change. 

McLean & Company advises that a move towards a skills-based organization requires foundational conditions such as leadership buy-in, cross-functional collaboration, and adequate resourcing. They stress that mere desire to transform is insufficient for progress along the skills-based spectrum.