How to Develop an Agile Workforce Through Skills

If qualifications and job titles defined the labour market of the past, skills are defining the labour market of the present and future. A skills-based approach to labour market data enables education providers and organisations to bridge existing gaps and make the much-needed connection between the talent available and the skills businesses need to grow. 

Our VP of APAC Operations, Daniel Leadbeater, recently hosted a webinar discussing how organisations can level the field by adopting a skills-based approach to hiring and managing talent. He was joined by three very special guests: our Director of Research, Rusha Vankudre, Dr. Jo Ingold, Associate Professor at Deakin University, and Nick Kennedy, Chair of The Workforce Planning Institute. 

This article compiles some of the key data and findings shared in the webinar, highlighting how the skills-based hiring trend has been playing out across the world and how organisations can leverage this approach to improve talent management and gain agility in the workforce. But first things first:

What is an agile workforce?

An agile workforce is a flexible and adaptive workforce that can quickly respond to new business needs and market dynamics. Talent and business leaders are responsible for ensuring that their group of employees have the necessary skills to propel the business forward, but also for setting learning and development plans so that current employees can boost their skills or pick up new ones, and take on new tasks as needed. This ability to pivot rapidly is crucial to gain a competitive advantage in today’s fast-paced and highly competitive market - and it can be achieved through placing skills at the heart of your talent strategy. 

Skills-based hiring & agile workforces: where are we at?

Lightcast is working with Boston Consulting Group (BCG) on new research to understand how skills-based hiring has been growing across the globe. We looked at job postings data from five countries: the US, Canada, the UK, Australia, and Singapore - a total of 18 million job postings between 2017 and 2022. 

To be able to measure skills-based hiring adoption, we first analysed job postings from five years ago, which advertised occupations that would have typically required some sort of educational degree. Then, our team looked at current postings for the same occupations to understand how educational requirements have changed. 

What they found was a 2.6% decrease in job postings requiring a four-year educational degree, pointing to an increase in skills-based hiring between 2017 and 2022. The change, however, is not uniform. The biggest decrease we noted in education requirements’ mentions in job postings was in the US, followed by the UK and Australia. On the other hand, Canada and Singapore showed an increase in their education requirements. So, what exactly is driving these changes?

What is driving skills-based hiring? 

Looking into Australia as an example, the Hospitality, Food, and Tourism sector stands out as the sector with the biggest increase in skills-based hiring (more than 10% over the last five years). Other Australian sectors that have dropped their degree requirements include Clerical and Administrative, Education and Training, and Customer and Client Support. 

Talent shortages across the world could be driving this trend - encouraging employers in this sector to hire more based on skills rather than qualifications so they can access a wider talent pool. This trend is also visible in other countries, and even governments and universities are part of the list of organisations opting to reduce their degree requirements. For instance, The New South Wales (NSW) government in Australia has dropped its degree requirements by close to 10%. 

If we look at the adoption of skills-based hiring for specific occupations in Australia, these trends align with sectoral trends. Hotel Desk Clerk stands out with a 47.3% decrease in degree requirements in its job postings, and occupations such as Restaurant/Food Service Supervisor and Curriculum & Instructional Designer/Developer have also experienced significant drops between 2017 and 2022. 

Skills-based hire job postings tend to list more skills than non-skills-based hire postings, and the majority of these tend to be common skills such as communication and innovation. This emphasises the growing need for human skills, despite the rise of AI and its impacts on the labour market. 

Developing an agile workforce through skills 

According to Nick Kennedy, agile workforce planning starts with understanding macro-economic trends and shifts in the labour market and skills landscape. Then, leaders can develop a gap analysis, benchmarking their own data against wider labour market or competitor trends, and build an action plan from there. Ultimately, talent leaders should work towards a process that enables a constant refresh, and continuously reassess it. 

It’s also worth shifting your mindset when it comes to hiring new talent. There are 1.4 million potential workers in Australia (“potential workers” is used to define people who are not currently in work but would like to be). In the UK, there were 9 million economically inactive individuals in 2022, some of whom would be interested in getting into or back into work. These figures are enough to paint a picture of just how broad talent pools could be - and how there is a lot of untapped talent across the world. 

A skills-based labour market perspective presents a great opportunity to improve hiring effectiveness and retention rates, reduce costs, and potentially increase productivity in the workforce. According to Dr. Jo Ingold, this transformative journey can be spread across multiple practical steps:

1. Reviewing current practices: looking, for instance, into turnover rates, engagement rates, and the effectiveness of current hiring processes. 

2. Looking critically at your job architecture: what tasks need to be done, and do roles need to be performed in the same way that they have traditionally been performed? Could you offer more flexibility, such as remote working?

3. Benchmarking work: understanding who your competitors are hiring, when and where they are recruiting. 

4. Using data to inform decision-making: analysing both labour market data and internal workforce data in order to understand potential skills gaps, who and where to hire, and how to best leverage the skills of current employees. 

5. Developing partnerships: Looking into which organisations and employment services are available that can provide access to hidden talent free of charge or further hiring support. 

All of the points above emphasise the need to access labour market data that is not only granular enough to accurately reflect trends in your region or country, but current and dynamic enough to reflect continuous changes in skills and occupation needs. For instance, the skills needed for a Software Developer role 10 years ago are completely different from the skills required to perform this role today. Understanding these intricacies and changes is crucial to build an agile organisation. 

Education providers can also benefit from understanding the skills that are needed today - and even looking into emerging skills that may be more needed in the future. No skills-based workforce strategy can be successful without obtaining the right skills - and education institutions play a pivotal role in ensuring that young and adult learners are well-equipped to go into their desired careers and meet employer needs - whether through learning new skills or boosting existing ones. Learning needs to be as dynamic as the labour market. 

Lightcast’s Open Skills Taxonomy, based on our library of over 32,000 skills grouped into 30+ categories, ensures that organisations can benchmark their data against the needs of the labour market and understand exactly what skills are needed for each role that they are hiring for. To make it even easier for them to embark on a skills-based workforce transformation, Lightcast can support them in normalising their data and building out market-optimised common and specialised skills for each role.  

Skills vs. qualifications: A mindset shift 

Traditional degrees are no longer the make-or-break in hiring talent. Even technological advancements are proving that human skills (such as common skills like communication, management, or teamwork) are increasingly important in any work environment- and those are often not the skills you could prove through a degree certificate. 

A skills-based approach is integral to these new developments, ensuring that companies are well-equipped to meet their needs and continue to grow, but equally ensuring that employers have long-lasting and fruitful careers. The most important factor in the hiring process will be whether candidates are committed to the job and the value that they bring to the company through their skills, more so than the degree they completed years ago. 

Any break from the status quo requires a mindset shift, and, as we have seen, this is already happening across the world. If you are looking to explore more about a skills-based approach and how to implement it, Lightcast can help. Get in touch with us below.