What are the benefits of skills-based talent management?

For the past century, organizations big and small have looked to jobs to dictate which employees will have ownership of specific responsibilities. It’s so common for work to be broken down into jobs that some leaders aren’t even aware that there are alternative talent management approaches out there.

However, as the pace of digital innovation accelerates and employers grapple with global talent shortages, there’s one new tactic that’s rising to the top of HR’s radar: skills-based talent management. Unlike traditional job-based approaches, skills-based strategies deploy people to opportunities based on capabilities and capacity levels.

Although skills-based talent management is a relatively new concept, the visionary organizations that are implementing it already have impressive results to show for it. From enhanced productivity to democratized career development, there is an array of benefits that businesses can expect to reap by putting skills at the center of their initiatives.

What is skills-based talent management?

Skills-based talent management focuses on an employee’s skill set, rather than their job title or position within the company. While that might sound like a small change in perspective, taking a skills-based approach can transform operating models and empower employees to achieve their full potential.

When organizations practice skills-based talent management, capabilities become the deciding factor that determines who will contribute to various tasks. In contrast, more traditional job-dominant talent management practices use the job description that accompanies every employee’s position to define the duties that they will be expected to perform. Due to the differences in these approaches, employees at skills-based organizations typically have their hands in multiple projects that fall within several departments or teams, while employees at other companies spend most of their time working within their own niche.

The importance of skills-based talent management

Skills-based talent management strategies are becoming increasingly common, especially as shifts in consumer demands and accelerated technological innovations change the skill sets that employees need to be successful in various roles.

Companies that take a skills-based approach to talent management can quickly identify knowledge gaps and begin reskilling and reallocating talent to overcome impending skills shortages. As a result, these organizations tend to be much more agile and adaptive because the silos that comes with working in jobs is removed from the equation.

Instead of rigid hierarchies that clearly define who does what, skills-based talent management enables employees to move freely from one project to another based on their capabilities and capacity. This dynamic approach to talent allocation makes it easier for skills-based organizations to shift gears and react when new challenges emerge.

5 benefits of skills-based talent management

There are a handful of advantages associated with taking a skills-based talent management approach, including:

#1. Greater agility

Companies that practice skills-based talent management recognize that employees will need to hone new skills to ensure their business can keep pace with the accelerated speed of technological innovation and shifts in market demands. By aligning workers to projects and tasks based on their competencies—rather than their job titles or level of seniority—skills-based organizations are better equipped to pivot and react to challenges in record time.

An emphasis on internal hiring over external recruiting enables these organizations to efficiently access in-demand skills and sidestep the lengthy search processes associated with most other talent acquisition strategies. Overall, skills-based organizations are 57% more likely to anticipate change and respond effectively than their competitors.

#2. Minimize silos

There’s no such thing as a rigid hierarchy within organizations using skills-based talent management strategies. Instead, talent flows freely across the enterprise, in turn empowering more frequent and seamless cross-functional collaboration and preventing knowledge from staying trapped within a specific department or team.

#3. Enhance productivity

When work is unboxed from jobs, it empowers employees to put their skills to use across their entire company, rather than working solely within the confines of their individual department. Skills-based organizations unlock their workforce’s full potential by encouraging everyone to contribute to projects, regardless of which function or team owns it. Due to this shift in perspective, skills-based organizations are 49% more likely to maximize efficiency when compared to their peers who rely on job-dominant operating models.

#4. Promote diversity and inclusion

Taking a skills-based approach to talent management often removes many of the barriers that have traditionally held employees from underrepresented groups back, leading to improved diversity and inclusion in the workforce. When hiring managers get recommendations for who to staff on a project based on their skills—not the names on their resumes or where they went to school—leaders can feel confident that they are empowering workers from all walks of life to grow within their company. Overall, skills-based organizations are 47% more likely to provide a work environment that is inclusive to all employees.

#5. Improved employee engagement

More than one in two employees report that their current role doesn’t make good use of their skills. When workers don’t think their capabilities are being put to good use, they will almost inevitably begin to disengage and eventually search for new opportunities where they feel like they can make more of an impact. Rather than limiting employees’ scope of work to the confines of their jobs, skills-based talent management tactics empower employees to achieve their full potential.

The challenges of skills-based talent management

While embracing a skills-based strategy has many benefits, there are also a few challenges that leaders should be aware of. One of the most common roadblocks that companies face is a lack of visibility into all of the skills their workforce has. While most leaders know the capabilities employees need to perform their jobs, they may not be aware of competencies that fall outside of their domain and knowledge that workers are building over time.

Without this level of transparency, it will be next to impossible to deploy employees to open opportunities based on their capabilities. To overcome this challenge, many companies are turning to skills intelligence tools like Gloat’s Skills Foundation to gain a clear picture of all the capabilities their employees are bringing to the table and how to best harness them.

Another obstacle that some organizations may encounter is a reluctance to share talent and resources. While managers may be possessive of their direct reports under a traditional job-dominant talent management approach, skills-based organizations should encourage employees to lend their skills to projects in many departments within their companies. To embrace this talent sharing mentality, some organizations are introducing talent marketplaces that match employees to open opportunities based on the skills and expertise that hiring managers are looking for.

To learn more about what it takes to put workforce capabilities at the center of every initiative, check out the ultimate guide to the skills-based organization.