How Skills-Driven Workforce Transformation Can Help Your Company Thrive

The world of work is changing. The days when people were defined by the qualifications they have or the job title they’ve been given are disappearing. Instead, people are increasingly being defined by the skills they possess. This is because skills – the knowledge, abilities and talents people acquire – are the real building blocks of work.

Recognition of this is forcing a change in the way organisations think about their workforce, in order to stay competitive in a labour market that is rapidly changing. Why? If a company’s workforce data is based on job titles that are perhaps outdated and don’t truly reflect the roles being performed; and if the world of work is built on skills that are highly granular and changing rapidly; this creates a mismatch which makes it almost impossible for the two datasets to “speak” to one another. This in turn means that companies cannot easily make strategic workforce decisions that relate to the real world of work.

The need for a new paradigm … and the challenges this brings

What’s needed is a completely new paradigm – one where companies revamp their workforce data to match the new skills-based reality. The company that can make this shift to align their workforce data to the skills-based realities of the labour market will open up a whole new world of possibilities for workforce transformation.

Yet making this paradigm-shift is mind-bogglingly complex, since large companies tend to have messy descriptions in terms of their job titles and skills definitions. Nor do they have the time, resources or knowhow to clean them up. More on that below.

What is skills-driven workforce transformation?

Skills-driven workforce transformation represents a paradigm-shift over conventional workforce planning methods. Rather than focus on job titles or other modes of categorisation, the focus is on the skills that people possess in the present and could add in the future.

Aligning an organisation’s workforce data with current skills terms enables HR leaders, Heads of People Analytics, and Strategic Workforce Planners to leverage actionable insights to identify top talent, understand the market, benchmark against competitors, foster career success, pinpoint opportunities for workforce growth, and more.

By facilitating access to the right talent with the necessary capabilities when required, skills-driven workforce transformation empowers organisations to thrive in today's constantly evolving business environment and be future-ready when the market changes.

Why are companies shifting to a skills-driven approach to workforce planning?

The global labour market is experiencing rapid change, leading to a fiercely competitive landscape. According to Manpower, 77% of companies are facing acute talent and skills shortages. Moreover, Lightcast's own Skills Disruption Index 2022 revealed that 37% of the top 20 skills requested have changed over the past five years, and one in five skills is entirely new. This highlights the need for organisations to really understand both the skills make-up of their workforce, and also how this connects to the changing labour market, so that they are much better placed to face the future with confidence.

The skills-driven approach to workforce planning can yield impressive results, improving employee retention rates, reducing mis-hires, and increasing the overall efficiency of the hiring process. By being better attuned to the shifting skills landscape, organisations can position themselves to navigate these rapid changes more effectively.

The benefits of skills-driven workforce transformation

Different organisations find that this approach creates impact in different ways. Here are some of the frequent areas where we see the most positive impact in terms of talent acquisition, planning, and deployment strategies.

• Create, maintain, and update job architectures

  Skills-driven workforce transformation helps organisations create and maintain dynamic, self-evolving job architectures that are aligned with market trends and needs. By leveraging both internal and external data sources, decision-makers can receive guidance on merging roles, updating job codes, and prioritising the most impactful skills within their organisations.

• Gain a comprehensive view of the workforce and its current and future needs

  Understanding the existing capabilities and knowledge gaps within your organisation is essential to maintaining a competitive advantage. A skills-driven approach to workforce planning provides employers with the necessary data to ensure their workforce possesses the essential skills for success. Furthermore, this then opens up the potential for sophisticated labour market analytics to offer comprehensive benchmarking of industry trends, job values, and emerging skill sets, supplying invaluable insights for shaping your business vision.

• Make informed hiring decisions

  HR leaders who need a thorough understanding of their team's competencies require help to fill strategically significant roles with the right hire. Unfortunately, 92% of executives feel their employees must possess corollary skills for success, resulting in an exhaustive, complex, and costly external hiring process.

  Leveraging cutting-edge skills data and taxonomies in workforce planning allows HR leaders to pinpoint and quickly recruit top talent for their organisations. Comprehensive skills profiles enable employers to identify potential candidates faster, helping them hire employees with the necessary attributes for their positions. By understanding skills-based compensation and supply and demand dynamics, organisations can also improve their hiring strategies and attract diverse talent.

• Optimise succession planning for new leaders and key personnel

  Only 35% of enterprises have a formal succession planning process. Consequently, numerous leaders are inadequately prepared and undertrained when assuming new positions, leading to failure—research from Harvard indicates that 60% of executives fail within 18 months of being promoted.

  A skills-based approach to workforce transformation delivers insights that allow HR leaders and managers to optimise succession planning by identifying skills, competencies, and potential for specific roles. Internal and external workforce analytics provide a comprehensive picture of future leaders who are best suited to tackle both existing and emerging challenges and opportunities.

How to implement and embrace skills-driven workforce transformation

Implementing a skills-driven approach to workforce transformation is a huge challenge for any organisation. But with Lightcast’s ready-made jobs and skills taxonomies, which can be integrated into your workforce data, we do all the heavy lifting:

1. We take your workforce data and clean up the job descriptions, both in terms of job titles and skill definitions.

2. We normalise this data to the broader labour market using our cutting-edge jobs and skills taxonomies.

3.  With this new, transformed workforce data, we open up a whole new world of possibilities to benchmark and compare your skills profiles against your sector and competitors.

Deloitte's research indicates that organisations that shift to a skills-driven approach are significantly more successful in pursuing innovation and agility. Rather than recruiting from outside, such enterprises can fill talent shortages using internal resources – resulting in 107% greater efficiency when placing staff appropriately and 98% higher retention for their high-performing employees. 

Once in place, this approach paves the way for a far more agile, adaptable, and efficient organisation:

• Identify quick wins and business focus

  Begin by connecting skills data to specific business outcomes and identifying quick wins that demonstrate the value of a skills-based approach. Engage business leaders to drive the change and promote the adoption of skills-driven intelligence across the organisation.

• Integrate skills into existing workflows 

  Incorporate skills data into your HR and learning system workflows, making it an integral part of your organisation's everyday processes. Ensure that your talent acquisition, development, and management strategies are all informed by skills data.

• Establish a common skills language

  Develop a common language for discussing and evaluating skills across your organisation, ensuring that hiring managers, recruiters, and employees are all on the same page when it comes to understanding and assessing the skills required for various roles.

• Leverage technology and analytics

  Utilise advanced analytics tools and technology to gain valuable insights into your workforce's skills and the broader labour market. This information will help you make informed decisions about where to invest in skills development and how to shape your talent strategy.

• Focus on the most impactful skills 

  Recognise that not all skills are equally important for every role, and prioritise the 10-15 most crucial skills for each position. By concentrating on these essential skills and business-critical roles (such as sales or customer-facing positions), you can more effectively target your resources and efforts.

• Continuously evaluate and adapt

  As the workforce and market conditions evolve, continually assess the effectiveness of your skills-driven approach, and adjust as needed to stay ahead of the curve. By maintaining a proactive stance, your organisation will be better prepared to navigate the rapidly changing business landscape.

Embracing and implementing skills-driven workforce transformation is a powerful way to unlock your organisation's potential and create a more agile, resilient, and innovative workforce. By following these steps and committing to a skills-first mindset, you can position your organisation for long-term success in a constantly evolving global market.

Good luck on your skills-driven workforce transformation journey!