What is a skills taxonomy? (and why do you need one?)

A single source of truth for better business decisions is necessary. Here’s why:

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By Nicole Schreiber-Shearer, Future of Work Specialist @ Gloat

March 9, 2022

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In our new world of work, businesses must be able to shift gears quickly if they want to achieve the level of agility that success requires. But what does it take to make these near-instantaneous pivots possible?

Many leaders recognize that when it comes to unlocking agility, skills are the ultimate fuel. They need a full picture of their workforce’s capabilities so that they can rapidly redeploy talent to meet new priorities as they arise. Yet, most enterprises don’t have a single and comprehensive source of truth to shed light on their workforce’s skills. Instead, they use countless disparate systems for human capital management, talent acquisition, learning and development, and talent mobility.

Since each of these tools uses its own terminology and captures different data about employees, crucial information inevitably slips through the cracks or gets duplicated. For example, a learning and development leader may be comparing disparate data between a Learning Experience Platform, Human Capital Management platform, and an external skills database to make sense of what skills they need to know and what skills are in the market. Eventually, response times lag because executives need to contextualize insights and make sense of the disconnected data. But what if there was a way to sidestep these delays and get straight to executing higher priority tasks?

What are skill taxonomies?

Now that agility is the ultimate competitive advantage, leaders need a way to talk about and track the competencies within their workforce in order to efficiently take advantage of them. That’s where skills taxonomies come into play.

Skills taxonomies are a hierarchical system of classifications that breaks down and organizes capabilities into groups and clusters. They can help employers and employees understand what skills they have and what kinds of knowledge they should learn next. A skills taxonomy is a powerful tool because it helps businesses capture the skills within their workforce and identify how these competencies change over time.

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Understanding and tracking the skills within roles with a talent marketplace.

Why do you need a skills taxonomy?

Skills taxonomies aren’t something to put on your roadmap; they’re a tool you need to start leveraging now. As industry analyst Josh Bersin explains, “Skills taxonomies will become the cornerstone of your people strategy.”

Having a skills taxonomy is like getting a five-minute headstart in a one-mile race. It doesn’t guarantee that you’ll outpace your competition, but it will make it very hard for them to catch up.

An increase in skills visibility will also help you get ahead in the future. You’ll make better workforce planning decisions because of the ability to identify emerging knowledge gaps, in turn highlighting the competencies that will be crucial to upskill or hire for in the coming years.

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Understanding the supply and demand of skills in the context of skills industry benchmarks and trends gives organizations a dramatic competitive advantage.

How to take skills taxonomies to the next level

A five-minute headstart is a pretty sizable advantage. But what if there was a way to double, or even triple that?

A shared skills language is a strong starting point. However, the rise of emerging technological innovations means that it won’t stop there. The best talent marketplace platforms are introducing new offerings designed to take skills taxonomies one step further:

#1. A single source for skills management
Gaining a full picture of the skills within your workforce is revolutionary. But what if there was a way to not only see and classify these capabilities but to also understand which competencies are in-demand and which are declining? A rich, unified workforce ontology lets you do just that, in turn equipping you with all of the insights you’ll need to make better workforce planning decisions.

#2. Easy access to job architectures
We all know the world of work is changing fast. As workforce pixelation goes mainstream and jobs are broken down into gigs and tasks, leaders must be able to update the way their organizations are structured. Job architecture management systems make it easy to oversee your job architecture in real-time and get insights and recommendations to inform how you structure and design high-priority roles.

#3. Benchmarking and workforce insights
Want to see how your business stacks up against the competition? Keep a pulse on skill, job, and talent trends by benchmarking against market data and viewing information by department, location, and opportunity type to inform your workforce planning.

#4. Harmonized data
What if there was a way to make sure all of your talent management tools speak the same language? Skills taxonomies that harmonize data enable leaders to connect any third-party HR analytics platform and utilize or export the data to create a consistent user experience and talent journey.

In a working world where reaction times are the determining factor that decides which businesses thrive and which barely survive, every organization is vying to outpace the competition. If you’re looking to turn skills visibility into your competitive advantage, check out our ebook, The ultimate guide to the skills-based organization.

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