Defining the ROI of a Skills-Based Organization

Learn How to Define the ROI of Skills-Based Initiatives

Time Stamps

Intro - 0:08

Who is Lightcast? - 1:10

Speaker Intros - 1:50

Defining a Skills-Based Organization - 5:14

Skills-Based Organization Maturity Model - 10:31

How to Initiate a Project - 19:30

How to get Some Quick Wins - 28:44

How to Build a Roadmap Fueled with ROI Data - 34:37

Q & A - 50:21

Skill requirements are changing in every industry and location across the globe.

While becoming a skills-based organization isn’t as quick as flipping a switch, the benefits are real. Skills provide directional guidance to make role, talent, learning, and hiring decisions. 

We discussed laying the foundation for becoming a skills-based organization in our first webinar, The Three First Steps to Building a Skills-Based Organization.

In this webinar, we explore the importance of defining the ROI of a skills-based organization, where to start, and provide tangible examples you can use to gain buy-in from your team and leadership. 

The Benefits and Expansion of Skills-Based Initiatives

Beginning your skills journey might seem daunting, but you have to start somewhere. Skills-based initiatives typically begin in learning and development (L&D), but often expand into other functions of your organization, like skills-based hiring, succession planning, and strategic workforce planning. 

Many companies have been using skills for years and in different capacities, so they aren’t new. But it is becoming more critical to connect skills with learning, work, and career paths along with cost and revenue forecasts. Skills help your organization adapt to changes in the labor market, as well as keep your people engaged, informed, and progressing in their careers. 

Ready to define the value of becoming a skills-based organization? These three topics are covered in the webinar:

1. How to initiate a skills-based project

2. How to achieve quick wins with skills-based initiatives

3. How to build a roadmap fueled with ROI data

Topic 1: How to Initiate a Skills-Based Project

Hiring, L&D, and internal mobility can serve as starting points to show early wins, allowing you to gain momentum to move into other business functions. When you think about building your business case, show the ROI that has an impact across your entire organization. Not all value necessarily comes back to the dollar, so think through the intangible benefits of becoming a skills-based organization, too. 

Topic 2: Achieving Quick Wins with Skills-Based Initiatives

Many quick wins for organizations revolve around optimizing job postings and job descriptions. But there are several other ways to accomplish quick wins. These might include standardizing your skills taxonomy, creating skills-based interview guides, or choosing just two or three critical roles to refine your skills-based approach. To learn more about these quick wins and for more useful examples, watch the full webinar. 

Topic 3: Building a Roadmap Fueled by ROI Data

Be sure that everyone, especially leadership, is in agreement if you decide to become a skills-based organization. To do this, you need to be able to calculate ROI and demonstrate the financial impact associated with your skills-based initiatives. Here are a few examples:

1. Use career pathways to promote internally rather than hire externally

2. Build emerging skills rather than buy them from the market

3. Eliminate degree requirements for roles that don’t necessarily require them

4. Build transparency around career opportunities to increase productivity

Becoming a skills-based organization is a win for everyone.

When you define the ROI of becoming skills-based, you have the foundation to create a cohesive system across your organization to drive strategy, achieve business goals, and create lasting engagement. Lightcast can partner with your organization to provide workforce intelligence and insights to initiate skills-based projects, as well as guidance for building your case around skills. 

Watch the full webinar and connect with an expert to support your skills-based initiatives. 

About the speakers: 

Mark Hanson, Lightcast VP of Strategy 

Mark currently leads skills product strategy, including Open Skills, Lightcast’s free and accessible library of 32,000+ skills. Previously, he led people analytics and talent intelligence at United Healthcare. 

Rachel Sederberg, Ph.D., Lightcast Sr. Economist & Consulting Manager

Rachel researches business responses to labor and talent shortages with global enterprises. She previously worked as an assistant professor at Bowdoin College, and Adjunct at Stonehill College and Northeastern University. 

Mitchel Macnair, Crown Castle Director, Talent Development & Learning

Mitchel has proven success in creating, communicating, and driving global learning vision and strategy. Formerly, he served in the US Navy, then spent over 25 years at Dow Chemical in engineering, supply chain, and HR fields. 

Webinar Transcript:

Mark Hanson:

Hey, welcome everybody to our May webinar as we are continuing our series on a skills-based organizational journey. And we are excited to have everyone here. We're going to give everyone just a minute as we see the attendees flow in here. We'll get started in just one minute. But thanks to all for joining.

Great. It looks like we have critical mass here. Yeah. So again, welcome everybody to our May 2023 skills-based organization journey. We are in the second part of a series of the webinars that we're doing on this topic. We're super excited to have everyone here. This is a topic near and dear to my heart.

I'm excited to be joined by a couple dear friends and one colleague. And we will be walking through a few different topics today. But excited to hear any feedback or questions that you have along the way. Please put them in chat. We will be responding throughout and then we'll have a section at the end where we can cover more detailed questions. So please don't hesitate as we go through and cover fun topics of what is the ROI of becoming a skills-based org, and where are the good places to get started. What are some practical examples that we can be talking about with our teammates and leaders?

Super excited to be sharing what is on top-of-mind for many companies right now, and likely within your org as well. Just real quick about Lightcast, if you've stumbled across this invite and don't know much about us. We are a labor market information company and we're trying to bring all of the labor market dynamics that are happening from workforce and skills. And around the globe, trying to bring that all together into one spot so we can have a full analytical horsepower as we start to analyze what's going on in the world of work and the world of skills. And we want to bring clarity and enrichment and value in terms of the insights delivered to help your company make better talent decisions.

Hopefully you know a little bit about us, and happy to double click on that if there's more questions. But yeah, we are excited to have you here. I'm joined today by the wonderful Rachel Sederberg. She is on our applied research consulting team and she is wonderful, and I have had the chance to work with her quite a bit. I'll let her expand on that.

And as well as Mitchell Macnair, a good friend of ours and now the Director of Talent Development and Learning at Crown Castle. And is I would say one of our leading experts in this space of becoming a skills-based organization. 

I'm Mark Hanson. I help lead some of our strategy work here at Lightcast. Super excited to be here to have this topic because I was able to do this for five years at UnitedHealth Group, helping lead their people analytics team and be able to ingest Lightcast data to help enhance all of our internal talent strategies and wonderful dashboards and all the fun things that we got to do there.

And so I've been with Lightcast for about four years, and I've got to dive really deep into the world of skills and all the wonderful things that we get to work on as a labor market information company in gathering skills data from around the globe. Rachel, I'll let you extend your intro, but thanks for being here.

Rachel Sederberg: 

Awesome. Thanks so much, Mark. Great to see all of you. I am Rachel Sederberg. I am a senior economist and consulting manager here at Lightcast. I've been with the company about three years, and I work primarily in our human capital management and emerging technology space. I'm trained as a labor economist. As you can imagine, our data is something that a labor economist can really dream of, right?

It's the thing of my grad school dreams, and I love what I do, consulting with various companies of all different sizes and across the world. Previously to being at Lightcast, I was an academic. I like to think sometimes I still am in a way, but I taught a number of different economic courses at different colleges and universities across New England.

So thrilled to be here, thrilled to be speaking about skills and where this labor market is going.

Mark Hanson: 

And Mitchell

Mitchel Macnair: 

Awesome. Very honored to be here today. Thanks everybody for joining. So my background is I spent almost 10 years in the Navy in the nuclear power field. I was on a submarine, and I was an instructor in the Navy helping to train operators to safely operate nuclear submarines and ships in the Navy. I joined Dow Chemical after that. My background is instrument electrical engineering, but I did instrument engineering, some supply chain, back to engineering, and then over to HR over my 25 year career at Dow. And so now I'm working at Crown Castle as a development of learning and talent development. And I'm excited to be in a different industry, so it's learning for me. So I'm moving from the chemical industry to the telecommunications industry. And so for me it's a great learning opportunity and some new skills to build in this new industry. So glad to be here today.

Mark Hanson:  

Thank you so much Mitchell and Rachel. And as we talk about career paths not being linear, those are two perfect examples of non-linear career pathways. I'm in that boat as well. I started off as a financial planner and somehow ended up in the world of software and skills. Yeah, this is wonderful.

And again, it highlights the importance of the topic of skills and how skill development can lead you anywhere. The first we spot we wanna start at is how are we defining a skills-based organization? If you missed the first webinar, we covered this pretty extensively, but we want to do a quick double click on this because it's really important for us to level set on this because, what does it really mean?

And we'll unpack this as we go throughout the webinar. But the reality is there's wonderful promises that are being talked about. Everybody's coming up with some sort of AI skills solution and this product has these features. And my leaders are asking me, what does it mean to be a skills-based org?

Where do we need to start? Is it just a recruiting thing? Is it just a learning thing? There's all sorts of conversation happening around this, and so we're hoping to break this down a little bit. The reality is that skills don't solve everything. It does take time to implement some of this work.

It does have complexity to it, but their benefits are real. The things that we're going to talk about today don't have to be over complicated. Implementation can start with a few easy steps. And we want to keep seeking that competitive advantage of how do we stay ahead, how do we keep our people engaged and happy and retained and moving up within their careers?

And, we want to take the skills and use them in the right way and use them to complement existing solutions, not make this the end all be all solution because there's many other pieces of the puzzle that need to be working together to make this work. And so we're hoping to give you that high-level view and then show you the components that really matter.

Rachel, I was wondering if you had any comments on this.

Rachel Sederberg: 

Absolutely. I think, from the labor economist perspective, there's so many things going on in the labor market right now. We're thinking about the aging out of the boomers. We're thinking about technological change, all of this speak of AI, right? As creepy as it may or may not be. 

Thinking about those technological advances that are coming down the pipe in the next two, five, 10 years or even the ones that are already here. And how does a company most reasonably adapt to these changes and prepare for the next ones? And that skills-based organization is where a great number of strides can be made.

For my own example, my own experience in economics, I came out of my econ PhD and took a job here at Lightcast as a data scientist, and I had people saying, what are you doing? You studied economics? And I said applied econ is data science. It's that skill gap and understanding what those short jumps are to make really meaningful change and forward progress are really important here. And it's something that companies can leverage with their own existing workforce or people that they're looking at on the labor market, and it can really reap some serious benefits for these companies.

Mark Hanson: 

And Mitchell, I was curious do these topics hold up on your side from your rich experience from multiple organizations?

Anything you would add here?

Mitchel Macnair: 

Yeah. Thanks for asking. I would say that just an observation is that it typically starts in L&D, but once you get going, you quickly realize that it's not attainable just within L&D. And you start to see the expansion over into recruiting for skills-based hiring.

It expands into all kinds of things like succession planning, strategic workforce planning, and things like that. The other thing that I would say about this for folks as they're looking at this and it seems daunting. The advice I would say is, don't wait. You have to start somewhere, right? You can't finish if you don't start. 

But the other thing that I would say about this is, I shared this with Mark before, but I remember watching a show where they were showing the satellite images of nightlights over the cities in Europe. And what somebody did is they superimposed Roman roads on top of that satellite image. And it was amazing how well they lined up.

Roman roads were one of the first information superhighways, and it enabled trade, quick travel between cities, and economies to grow. And so what I would say about becoming a skills-based organization, from my opinion, what you're doing is you're building the Roman roads of the future really is what you're doing. It is something that will outlive you and provide value to your organization for a long time. So it is a new way to think of it, and it really is, you're building that infrastructure for your organization to act in an agile way and a much faster way to changing market conditions.

Mark Hanson: 

That's awesome. Yeah, I love that analogy that you shared because it's about paving the way. And we have to start with those first bricks on that road and bring this together. And it is complex from the different tech stack that needs to align, from the stakeholders that need to align on what is the strategy, where are we going to implement this, how deep are we going to go in the different areas?

And that shouldn't stop us from building that road and building those offshoots of where it all connects. And it's a great segue into, what we think of as a maturity model of seeing where companies are at currently, because many companies certainly have been using skills for many years.

And they've used it in different capacities, whether it's just in a learning context or they've used it for resourcing and consulting teams, or maybe they had to develop some innovative tech and they had to be really strategic with their sourcing of certain candidates for hard-to-fill jobs. So certainly for businesses, this is not new, but I think as it becomes more critical for how we connect learning and work and career paths and the build/buy/borrow models that we talked about in our first webinar. How do those strategies get affected if we don't have things well connected, if we don't have our stakeholders engaged, if we don't have the right infrastructure in place to connect all this together, and do we have the right governance and is it tied to our business value?

Nothing works in a company unless it's driving value for the business. That's why we have it as pillar one in saying, this needs to be connected to your cost and your revenue forecasts, and what is the business trying to do and deliver. So we want to start there, and we need to build out these other pillars to make this all work together.

And as we think about this, think about this slide as a backdrop as we have our discussions in wanting to say, we want to move up this maturity scale, we want these pillars to be working in tandem so that we can drive the best experience for our employees, for our stakeholders, and for our shareholders all across the board.

If we get these right, this becoming a skills-based organization, you'll very likely succeed at this. But this is a long road. It's certainly not a quick hit. But Mitchell, I'd love your thoughts on this. And just as you've been experiencing some different organizations, they've all come at this from different angles.

Curious if you've experienced this breakout.

Mitchel Macnair: 

Yeah, I like this framework of this maturity model. Just a couple things that I would tell folks, those who are not, or haven't really started on the skills-based organization journey. When I look at this, I think a lot of companies have competency models that they're using, and competencies are made up of skills, knowledge, and behaviors.

And so when I look at this, I think some of those companies, even if you're not on a skills-based organization journey yet, you probably could see that maybe under delivering the business value delivered, you might be at an established level using your competencies and maybe even all the way over on the right hand side, the stakeholder engagement. You might say, “Hey, we're kind of operating at an established level with the engagement with our business unit leaders on our competencies.”

But I think what we're talking about is that, by moving to the skills-based organization, it's going to enable you to hit the items in the center two columns, but also enable you to go up to that world class on both business value delivered and stakeholder engagement. And I think the competency model today can only take us so far, and we finally have the technology in place to enable us to achieve greater value from the information that we have available to us.

Today, we just have better tools to help us see the information and insights that we weren't able to get to before in the past.

Mark Hanson: 

Yeah, that's great Mitchel. And I think one of the questions we get asked often is: If I have a competency model in place, do I even need skills?

Is this applicable to other, various certificate-rich companies, like a healthcare company or something like that, where nurses have established certifications and licenses that need to be there. And it absolutely is applicable because as we think about this as a backdrop, skills is going one level deeper than a competency model.

It's going one level deeper than the certifications because what we want to do is have that peek around the corner of, what are the emerging skills that are needed to have the workforce of the future? What do we need to drive value, not just today but tomorrow? And how do we need to be developing the right skills? What skills do we need to be buying from the marketplace? 

It's really a compass for how we need to look at workforce planning and get one layer of granularity that we've had pieces of in the past, but we need to go one step further into that. So skills are very applicable even for our healthcare companies out there.

I know the question came in that. It absolutely builds upon that because if you think about a certification or a licensure, it's actually just a collection of a whole bunch of skills. And so, they do a great job of summarizing skills. But as you go into career transition, not every nurse wants to keep moving up in a nurse progression to more complicated nursing.

What if they want to switch to something else? Within a healthcare org, this is where career pathing and those adjacent skill sets become extremely critical. And we can't do that unless we have our data organized and structured in the right way, unless we have it tied to our team goals and business goals.

Rachel, curious if you had any final comments on that?

Rachel Sederberg: 

Absolutely. We work with a lot of different providers of certifications and on my team, we spend a whole lot of time taking certifications and boiling them down to what skills do they actually deliver, right? 

You can have a certification from company X or company Y, but what does that mean? What did you learn? And the same thing with degrees, right? What did you actually learn? What does that mean, “you got a degree in interdisciplinary studies,” right? I want to know what your skill set is. And that's something that's really important. And going with that is a unified ontology of skills and how we speak about them. This is something that needs to be dynamic, as we know skills that are in most demand today, those disruptive and emerging skills that I spend so much time looking into in my job, they didn't exist one, two, three years ago, right? And now they're some of the hottest things in the market. 

So a standardized definition set that is both dynamic and can be applied across a company is really important and understanding, essentially, what code words of certificates and education levels really mean is really important for companies. And that's something that you can take from your competency model and just shift over into this more skills-based thought process.

Mark Hanson: 

And that's a really good point. And we just had a conversation last week with a customer and they were getting hung up on the definition of skills. And at Lightcast, we take a very broad approach to that. So Mitchell mentioned competencies and behaviors and knowledge and skills all kind of grouping together in certain aspects, in certain frameworks.

We love to go to the most granular, and whether you call them traits or behaviors or knowledge areas, think of skills as the connective tissue between learning, work, and systems. And it's a wonderful mechanism to have that thread tied between all those systems. So on the outset, whatever you want to call a skill for the particular use case. If you're building an assessment and you really want to call this a trait on the front end as your employees interact with that, we don't have a stance of that. Make it most useful for what you need to call this in your context. But in terms of how we analyze this, how we look broadly across the market, skills is just our catch-all term to say, “what is that granular definition of work that describes a knowledge area, that describes a hard skill, or even a certification as a group of skills.” It's pretty loose for what it needs to be. But it should be talked about as part of your governance and part of your technical data and infrastructure. We should be thinking about where it's going to be used and how it needs to be defined so it's the most useful for either matching up with existing things that we've already launched or it's just applicable for that use case. 

So again, we don't get too hung up on specific terms because we want it all to be connected across our entire data ecosystem to make those better decisions. But certainly something that needs to be talked about.

Rachel Sederberg: 

And one additional thing on those skills. It doesn't necessarily need to be hard skills. It doesn't need to be coding and Python. It doesn't need to be understanding AI… harping on that example. It's leadership skills, it's interpersonal skills, it's team management, project management.

All of those sorts of things are also really important skills that are part of a skills-based organization. 

Mark Hanson: 

Absolutely. Great, thank you. So the first major topic we wanted to cover is how to initiate a project. We can approach this in many different ways. Obviously, this is kind of a flow here on this, give me an example of all the different kinds of employee life cycle as it comes through different areas. 

But Mitchell, I thought I'd start with you and say, as you think about some of the past projects that you've started or different colleagues that you've worked with, how they've thought about this, where did they start?

Give us some examples from your experience.

Mitchel Macnair: 

Yeah, so what I would say is we recognized very quickly that it was a pretty expansive effort to go through this. We started thinking about it in a multi-generational plan approach, and we put a filter on top of that to look at the work and say, where do we think employees will experience it, see it, and feel it first? And thinking about it from an employee experience standpoint.

And so some companies start further down from where we had it. We had like, phase three was strategic workforce planning, it was that phase of the overall plan. Whereas we were thinking, okay, interview guides, right?

Something like that on the front end in the talent acquisition space is maybe the first time employees might see it, or candidates might see that upon entry. So that's one of the pieces of advice, I think for us. It also helped us realize, hey, this isn't like we're going to get it done in 2023.

We realized very quickly this is really a big project and a process that we have to go through. But I would say one of the things is to chunk it in a way that makes sense for your company in your particular context. 

The other thing I would say is as you’re looking at, what is your use case? You might have different drivers that cause you to enter into this space. It could be from a hiring standpoint. That might be the biggest driver, you're not getting the candidates that you need, and so you're trying to sharpen that end of the spectrum. 

It could be on the back end to say, “Hey, we need to have a longer line of sight for learning and development, for building skills across the organization.” So we need to have better visibility into the skills that our people have and the critical skills that they need to have. So you might start in your job architecture and your job descriptions, like using Lightcast data to help you understand what are the critical skills for our roles. Giving visibility to your people inside the organization so that they know, hey, this is what the organization says are the skills I need to have to be successful in this role. 

You might have a driver that's internal mobility. And that is a nice extension from that last example I gave, which is to help people see, what do I need to be able to do skill-wise, what do I need to gain skill-wise to help me become a successful candidate for that particular role that I want to have as part of my larger career journey?

So I think it can start in many different areas, but I think my advice would be don't think you're trying to attack everything all at once because I think it's too big. Pick the beachhead that you're going to secure and show wins from that. That helps you gain momentum to move into the other areas that you want to move into.

Mark Hanson: 

That’s great, Mitchel. Curious, as you started different projects in the past, what were the initial headwinds that you experienced when you came up with the initial use case and plan?

Mitchel Macnair: 

Yeah, I think some of it is… some of the headwinds, there's always a technology piece. I would say, there's people, process, and technology. We tend to jump right to the technology piece, but I would say part of the headwinds is this process of doing this work will cause you to take a really hard look at your job descriptions. And you may come back and say, wow, we don't really have very good job descriptions. It's not very clear, there could be overlap, you could be calling the same job in different parts of the organization with the same title, but they're doing very different things. 

And so, part of when we started, we realized, hey we have to do some house cleaning first. We started with step one, and then we finally realized we actually have a step zero, which is to prep the organization for this work that we're going to be doing.

And so that's one piece of it, gaining buy-in and understanding this isn't a one year project. So helping your senior leaders understand the bigger picture of what you're trying to do and that you're on a journey to do this. I think that can be a headwind. And then I would say the last one is sometimes even from a technology standpoint, when you start talking about technologies, a piece of this, a lot of times in companies, the budgeting may come from your IT organization and the way that they run projects is on an annual basis, and some of this work is discovery. As you go through it, you're discovering maybe gaps or issues in your culture, certain pieces of this puzzle you may not be ready for in your organization. And so you have to think about that sequencing of how people are going to see it. And do you need to build some institutional knowledge and comfortability with some of the new ways you're going to be doing things? 

So, understanding that this is a journey. I don't know if the journey ever ends. I think the project continues on and you just continue to iterate as you go further along in the journey. And you continue to hone in and make adjustments as you go along. But that's another headwind that I think when we’re getting budgeting from the IT organization was helping them understand. They're used to running it with a finite end. And so it's hard to say, “Hey, we're going to be completely done with all of this by the end of the year.” I don't think that works for most organizations. 

Mark Hanson: 

And did you have to develop a lot of ROI hypothesis at the beginning or was that a later phase? Were you able to get stakeholder buy-in without an ROI plan, or what was the vision enough to sell it?

Mitchel Macnair: 

Yeah. So the way we did it was in our ROI plan, there were several different, there's obviously the financial piece. There was an employee experience aspect to it. So we had a couple different pieces of our ROI plan. I think that's important to consider all those pieces because some of it may not come back to a hard dollar ROI but you know you have enough evidence that shows, hey, we know if we put enough effort and investment into this area, we're going to have a payout. We just can't quantify it. 

So part of that is, I would say, thinking through even some of the more intangible items. Just to give you an example, companies who have gone through this process in particular. I remember hearing about Schneider Electric, when they went through this. They talked about their L&D efforts and how having a skills-based organization changed succession planning, that process. Whereas initially when they would have succession planning conversations, when leaders gathered around, you would just, human nature is to think, okay, the person we're reviewing, do I know this person and do I like this person?

That's just what's going on in the back of your head, whether you admit it or not, and it really limits the view that you have of the incredible talent that you have in the organization because you're relying on just a few people in your organization to bubble up a few candidates. And what they ended up doing was they started using the skills data to at least bubble up candidates that had the skills that could be successful at that next level.

And what they said immediately happened was their initial pool of candidates was much more diverse. And it gave leaders greater insight into the talent that they had in the organization. So a part of this, I think the journey on this that I think is really incredible and exciting is that you're going to be able to use technology to see things in your organization that you've never been able to see before.

And it's almost like looking at a set of data through a pivot table, right? When you look at the data with a different slice and you see it from a different perspective, you gain different insights. And so I think what we're seeing is the ability to show that we have greater insights into the data that already exists for our people today.

So I think, when you think about building that ROI, your business case for that, you have to take into different aspects like L&D, employee experience. They're all different, from a skills-based hiring standpoint, from a talent acquisition standpoint, there's lots of different areas that you should analyze and say, what is the ROI in these different sub areas?

And I think that really helps make a really strong case because it does have an impact across your entire organization.

Mark Hanson: 

I love that. No, thank you Mitchell, for those insights. We'll jump on the next topic here on how to get some quick wins. And Rachel, this is where I would love to start off with you on this topic, as you've done many projects in this area. How have you helped customers and clients find those quick wins early on?

Rachel Sederberg: 

So I think some of the quick wins that our clients see early on in projects is, just as Mitchell was saying, thinking about their job postings at the very start, or job descriptions and saying, oh no we're all over the map here, right? In terms of what we're asking for of our workers, what we think they're doing versus what they're actually doing.

Maybe job descriptions that we're using for hiring haven't been updated in a couple of years and the position has wholly changed given how rapidly the labor force is moving around. So that's a quick win that we see out of a lot of companies is saying, okay, let me rethink A.) what I'm calling these people and B.) what I think they're doing versus what they're actually doing. And so those kinds of resets, that step zero as Mitchel called it, is a quick win that I tend to see a lot. 

We do talk through a number of different things with clients. Things along the lines of seeing how their skills match up with what we're seeing in the marketplace. Some clients will come to us having given an assessment for skills to a number of their employees if they can get enough buy-in to those skills-based assessments., which admittedly can be hard but are fruitful if you can find a way to incentivize them. That's a great way to see how you match up versus the rest of the market. 

We can also see it from another lens, where we're looking at what you're asking for, either in your job description, or what your employees are posting on their social profiles. Their professional social profiles versus the rest of your competitors and seeing how you match up. Are you keeping up with the competition or are maybe things a little bit behind? Or maybe you're the leader and that's great too. So things that we see amongst our quick wins are items like that. And then just getting into the idea of standardizing that skills ontology is a quick win for a lot of companies.

Mark Hanson: 

Yeah. No, that's wonderful. And Mitchel, I was curious as you've gone through some of these different projects in the past and obviously you've done a lot of research in this area as you prepared for that. Any other, quick wins that you wanna highlight?

Mitchel Macnair: 

Yeah I think, like I mentioned earlier, having skills-based interview guides I think is a pretty quick win. Once you have determined what some critical skill sets are for, and I say quick win, start with your critical roles. You need to start somewhere. 

Or if you have a senior leader in an organization that's really chomping at the bit to get going, and they're an advocate in this space for you. If it's a natural starting place with that person where you know you're going to have leadership support and advocacy for that work, that's a great place to start. And by doing that, then you can gain wins and they can influence their peers, and you start to create demand inside the organization. People are going to say, “Hey, I want you to come do this with our group as well.” 

Another area is development plans. So individual development plans for employees. Again, once you start to create that clarity around the demand for skills for roles, people see, oh, I've got a gap here. That clearly makes it visible to them. This is a gap that I have. And so through L&D through either resources and/or experiences, key learning experiences, you could start to close those gaps. 

So that's two of the ones that I think are really quick wins for an organization that aren't too heavy of a lift. You have to be doing that, I think, in parallel with updating your job descriptions. But once you get those aligned, you can be doing some of this work in parallel with different groups within the organization.

Mark Hanson: 

I love that. All of those examples are extending what's already happening. So it's not necessarily building something brand new, but it's appending value on the existing processes that are there. Building skill profiles on those job descriptions and getting those with a skills lens on them. Focusing on, even just auditing, what are all the systems we have and where are employees interacting with different systems? What’s storing skill information? Just so that we can have a map of where data's flowing within the organization is a great spot to look because as you start to line up what the different leaders in different areas are asking for, like here's a pain point, or here's something that we're struggling with as a business.

It's amazing how many spots where skills can be an effective tool to add to that toolkit of things that are already being analyzed and assessed to put a more specific lens on that so we can get more granular, we can get more of a quick hit approach to say, we can use this for optimizing our job postings, so that we can recruit a little bit more effectively. And you can start really small on those two or three critical roles and just test things out with the right area. So that is wonderful. 

We'll jump into the next topic, and I think this is where I think we should spend a little bit more time because it's like, if we're convinced that a skills-based route is the right way to go, and we know that there's some easy spots to start, but also this is going to be hard to sell internally. What are some examples of where we've seen true ROI come through? This is what is going to get the senior leaders, it's going to get your CFO on board. This is the final step that's actually going to get the rubber stamp to say, yeah, go do that pilot or go do that proof of concept in this area because it has to come down to at least some dollars. And Mitchel, I love what you said earlier, it's not all about the dollars, especially when you think about ROI. But to get that final executive approval, it really does have to be at least initially, and then we can build off the more subjective ROI components.

But I would love to cover, Rachel, this would be great to start with you and talk through a couple of these case studies and then Mitchel, add in a few different stories that you've experienced as well.

Rachel Sederberg: 

Absolutely. This case study comes as a byproduct of a project that I had the good fortune of working on in the recent past.

And what we were working on was a manufacturing company who is starting to rethink their tech function, right? And as we were talking, starting small, starting with one subset of the company and going from there to say, okay, if we standardized roles, if we clean up our job architecture and understand what groups of workers should be teamed together and how they should be defined, that's where we started. And then where we ended was giving role profiles and a number of different characteristics of all the different roles that they asked us to analyze. And so what we were looking at first was career pathways, right? How do you go from that entry level to the mid-level job to maybe that higher up role and staying within the company? Because there's something to be said for employee retention, employee buy-in to the company, and that sort of loyalty.

If we look at a large company or a large retailer who built career pathways so that employees stay within, to develop skills especially, and then promote internally. We can see cost savings because you're not going out to the market to buy employees with those skills, you're building them inside. You're upskilling them. And what we're seeing is cost savings of about $13,000 per employee. And if you're a big company, that adds up real quick, right? That is not small potatoes. 

If we're looking at more of a manufacturing company where we're especially building emerging skills, those skills that are high growth, high salary premium. So you know, over and above the average for that role and hard to find. If you're building them internally, which does cost some in terms of training, it's still cheaper than going out to the market and buying them off the street. You're saving $20,000 to $35,000 per employee, even just a team of 10, right? That's a crazy amount of money and a crazy savings that you can reap pretty quickly.

We think that it takes about three months to learn a new skill, about 90 days. Okay. That's reasonable. And these are probably skills that are at least adjacent to what these workers are already doing, so the upskilling time may be even shorter than that. 

If we looked at maybe the finance side of things, if you eliminate certain degree requirements, we saw, especially in promising times for companies in the labor market where they could ask for more for the same amount of money. We saw a lot of increasing degree requirements that you didn't necessarily need that bachelor's, but they tossed it on there anyway because they could get it for the same amount of money.

If you eliminate degree requirements that aren't necessary, you could save 16 grand per hire on average. Thinking about what skills you need is more important than thinking about, oh, but I'd love to see someone with a bachelor's. Bachelor's are just a signal. What did they learn? What do they know? And so if we pull down that degree requirement and go for someone with the same skills and a lesser education, you can save $16,000 per employee in this particular finance example.

Mark Hanson: 

And Rachel, I was curious if you could double click on some of these, on how we calculated these.

I know all of these are from three different projects that we've done recently. Just wonder if you could double click on that. 

Rachel Sederberg: 

Yeah, absolutely.

So if we're looking, I know I mentioned a couple times of going to the market and buying skills off the street versus building from within.

What we're talking about here is if we look at a job posting, say a data scientist, someone with an understanding of AI, right? Since that's the hot topic, we might as well stick there. Someone with an understanding of AI, who's a data scientist. What is their salary on average in the market right now versus all of data scientists generally, whether or not they have that AI skill?

So how much above average does AI get you? That salary premium, that's where we're talking about in terms of cost savings, if we're going to build from within rather than buy out on the market. Not to mention the extra time of hiring someone with that skill. A lot of these skills are going to be hard to find, right? They're newer, they're hot. Everyone's looking for them. So you might as well think about taking the time to build rather than buy, right? Because we have to buy, build, borrow, and bot. If you want to go there, there's plenty of other B options out there, but those are our big four. So that's what we're talking about here.

In terms of career pathways, we're thinking about things that are similarities between jobs, right? Maybe we start with a nursing example. You start as a nursing assistant, what's the jump to an RN? We know that there's licensure. We know that there's probably a number of other skill requirements that you'd need to learn to make that jump from one to the next.

And what if we're going from an RN to an RN with a specialty, right? If you are an RN who's in critical care, you're an RN who's in cardiology, that sort of thing, what's the skill gap and how do you get there? And how much more would that cost if the hospital was to go out to the market and buy that specialized role versus building it from within? And having someone who's bought into the hospital system, bought into the company, and has some passion for where they are.

Mark Hanson: 

Oh, that's great. Yeah. And for more details on these, but you know, please reach out. We have been able to keep up on some projects and follow up with the companies to get the real, bottom line impact.

I know our IT one down there was a really cool one where the CIO was kind of sharing the results of the different projects that they were working on and what the actual realization was. And it was yeah, real savings and real dollars. So it makes it much, much easier to go back to the finance team and the other senior leaders to do those projects.

Mitchel. Yeah, was wondering as you think about the different ROI realization, curious if you have any stories related to this as well? 

Mitchel Macnair: 

Yeah. Just one on the bottom. One thought on the bottom, a statistic there. I was thinking about just the IBM story and when they went into digital badging, micro-credentialing. The issue was, they weren't getting candidates from college that had the exact skills that they really needed for those entry level jobs.

And so they partnered with a badging company, and they basically said in their job descriptions, if you go earn these badges on your own, they drop the four year degree requirement. They said, if you go earn these badges, which are skills, specific skills, then you become a preferred candidate for this job.

And I think it was like seven to nine months into that journey, every candidate that they had applying for those jobs had every one of those certifications that they were asking for. So they curated their talent pool for the exact skills that they wanted people to have. And by dropping the four year degree requirement, they had a much more diverse candidate pool from which to choose.

So I think that was just the beginning of their journey. So folks having seen that, David Leaser ran that at IBM. But a great story and that story continues for them. But I think they're down to about 50% of their jobs now have dropped the four year degree requirement. So that's a pretty incredible journey that they're on.

Just a couple other highlights that I would say. There's a medical device manufacturing company that when Covid hit and all elective surgeries were shut down, it really hurt them pretty badly. There was one business unit that they had, which was making ventilators. Obviously demand went through the roof, and so they partnered with a talent marketplace company to say, “Hey, what can we do to save as many employees as we can?”

We'd like to move people from their current business unit over to ventilators, and so they looked at adjacent skills to figure out who had the shortest distance between point A and point B. And they were able to save about 25% of the employees that they would normally have had to let go. And that translated into about four to six million dollars in severance savings.

So when you think about paying for that talent marketplace platform, it paid for it many times over, just in that one use case. And that was their pilot to show upper management, hey, this can make a lot of money for us. And that was a great example. 

Another one I have is Unilever. They partnered with a talent marketplace organization, and I just wrote down a couple things. They were trying to build transparency around opportunities and democratizing career development opportunities. But a couple of the results showed that they had a 41% increase in productivity, 500,000 hours unlocked from existing headcount. So that's, roughly 240 full-time equivalents of additional productivity they got out of their existing headcount. That's not even counting the additional projects and the value of those projects that those folks went on to work on.

So again, it's using skills data to connect people to gigs and get more work done. Taking advantage of your, I would say it's resource leveling, resource loading across the entire organization as people have some extra capacity to do some additional work that may be of interest to them, but outside of their core job, increasing career mobility and things like that.

The last one I had was a bank that had partnered with a talent marketplace company. The issue that they were having was struggling hiring cybersecurity specialists and they couldn't afford the outside salaries. And so they said, Hey, who in our organization has the shortest distance between A and B? It turned out to be financial analysts.

And so again, looking at adjacent data they were able to fill a critical hole that they had in their talent acquisition strategy by using this data around skills and looking at adjacent skills. And who would've ever thought that financial analysts would, that wasn't their initial thought, but that's what the data showed. 

And they were able to get people to volunteer, say, Hey, yeah, I'd love to make a transition into cybersecurity from a financial analyst. And so they were able to fill that role internally, where they were struggling filling it from an external standpoint. So those are just a couple, I think really good use cases of where companies are having really good success in impacting the bottom line using skills.

Mark Hanson: 

I love that. No, those are all super valuable and allow us to, as we, get back to this concept of pulling this all together. So we have wonderful ROI metrics. One of the things that we've just been helping a lot of our customers with lately, especially in this economic climate, is building that ROI use case and that pitch internally.

To leaders to say, where does Lightcast come in to help tie this all together? We love partnering with talent marketplaces and different learning systems. Several of them are already partners of ours, but we come in at that talent intelligence layer and can provide the insights and tie some of those disparate elements together and help build that ROI case for your leaders to say, this is why it's valuable to be thinking about a centralized taxonomy and pulling our system data together. How do we deploy the things that we maybe already purchased?

Maybe somebody already went out and bought that L&D platform or a talent marketplace and they thought that was going to be the silver bullet. But now, as you implemented it, you're not getting the right buy-in from the employees that aren't adopting it as fast. Or it maybe it wasn't working as promised, or we just need to get the stakeholders aligned because these projects are too disparate.

This is the point of kind of taking one step back, looking high level, what are we trying to accomplish within our different organizations? How can we start to think about this from a long-term perspective, but then piece out the right areas and get the right pillars in place so that all of these can be successful.

Yeah I wanted to leave this as a resource. We'll be sending out, obviously this deck as a follow-up after this webinar. But we've seen this work as a great backdrop to have conversations with your internal stakeholders to say, have we brought in the learning team and our talent acquisition team and our different talent leaders and do they know that we need to be pulling these projects together?

Two weeks ago we were with a company and they have wonderful projects going, but they're all in different silos across the organization and they said, oh, we should probably bring these together so that we can actually have a holistic approach, especially as we start to report on the success of these different programs.

They had neglected to bring in the reporting team to try to tie all their system data and different data feeds together. All well, good intentions and they're solving that piece that needs to keep their specific department moving in the right direction.

But yeah it's good to bring this back so that you do have the visibility. And more and more we're seeing the positions of HR get elevated to the C-suite because in this economic climate where candidates aren't just falling into our laps and we're having to work a lot harder to bring them through.

The talent shortage is real and it hits companies differently, but it's getting the attention of the CEOs and the CFOs. And so the more we can come up with realistic strategies behind this and use skills to our full advantage to set those different elements up for success, is going to be a win for everybody. And it's going to certainly elevate all of the HR team and different senior talent leaders. 

I thought we'd jump into some questions that the team has here, and I'll direct them to you. The first one that comes in is: do skill-based organizations need to demystify the current competency model and define skills contributing to the competency elaborating about the assimilation of knowledge application and demonstrating the same at work?

Mitchel, I was curious if since you're fully familiar with competency models and where that's worked, curious your thoughts on, do we need to demystify that a little bit and define skills in the same framework?

Mitchel Macnair: 

Yeah, so I would say, in my previous organization when we were looking at our approach, we looked at several different companies that assist in the space and we had a competency model, right? A pretty strong competency model that we had inside of our organization. 

What I would say is that we were looking for a partner that would help meet us where we were and help us transition to where we wanted to go. So what I would say about this is, in your approach, when we talk about demystifying this and really identifying the skills, I think, this is just my opinion, I think it's easier to have somebody, a partner who meets you where you are to take you where you want to go, versus just doing cold turkey and jumping to just a skills-based. It's a huge leap. I think it has to be a progression. And so part of this, when we started working with a partner, we were using Lightcast data.

And that provided a really a lot of good insight for us because not only did we get the skills that we needed to map to our jobs, and we could go verify that with our subject matter experts and say, hey, does this fit right? But it gave us a starting place so that we had market data plus internal data.

And then also having the definitions of the skills, I think is critical because the next step when you start going down this road is you want to start assessing, right? And so if you don't have a common language, you're going to have struggle with assessing skills, right? You're going to have high variability in how people are being assessed on those skills.

So anyway, I would just say the demystification aspect of it is, some people saying our competencies are going away. We had an operations leader at my company who said, the part about competencies that I really like are the behavioral aspects. Now, I would say you can define some of those behavioral aspects as skills.

But her next comment really stuck with me and she said, I don't want to have a bunch of skill robots, where we just have people just gathering skills, right? We want to talk about behaviors, but I think you can say certain behaviors, you can learn that as a skill, right? It's something that you can practice, it's observable, you can demonstrate those. I would say more soft skills that we've had in the past, they're all hard. So I hope that, hopefully that answers the question.

Mark Hanson: 

Absolutely. And people forget that those soft skills are the best transferable skills when, especially when you have a very active employee base that could move anywhere. It's hard to get zeroed in on very technical skills and then feel like you're pigeonholed in your career. Yeah, having a lens and a viewpoint on those soft skills really does help. 

Rachel, I'll direct the next one at you and then Mitchel, maybe you can fill in if you have any ideas. The question is, I love the idea of building skills into our HR database and our analytics. Can you recommend a lightweight assessment to gather this data across thousands of employees?

Do the organizations bake this into their performance and development plans to collect and document the skills? And how much does the manager bias skew this type of approach in terms of the objective analysis and the skills to the business outcomes? Yeah, curious if there's a good way that you would start as you start to pull this into gathering this data from the employees or what I would argue for maybe some of the job architecture as well.

Rachel Sederberg:

Yeah, absolutely. So there's a lot to unpack here. I think there is a place for finding some sort of skills assessment maybe in your yearly or every six month performance and development assessments. Both from the employee themselves and from the manager because there's going to be bias from either side, right?

You're going to have some who are overconfident. And there are going to be some who are more bashful and either way, there's going to be a little bit of fuzziness in this data and there's a lot of academic research on this topic that I won't bore you all with and go down that nerdy path.

But at least getting something, right? Getting some sort of baseline. And the more you can get, the better, right? But even if you start small of, hey, here are the top five competencies that we think someone in this role needs. Do you have them? Do you not? But starting with basic skills architecture is really important, because then what you're asking them can talk to the data from the rest of the market.

So before we go and ask all these questions and make surveys and all of that, we need to have a base where we know that what we're doing in phase one is going to work with phase two and phase three in a very seamless manner that will give us the most information. 

In terms of ways to gather information from thousands of employees. It's a tough one, right? If you can find a way to bake it into something they have to do anyway, great. Otherwise, we know that reporting is going to be maybe in the 30% to 40% range at best. And that's just the nature of surveys, right? The government struggles with the same thing, trying to get people to respond to even public surveys.

The survey we use to get unemployment data is often done by literal telephone call and I don't pick up my phone for a random number, like I'm not even going to pick up. And I'm one of the people who uses that data the most here at Lightcast. So it's a challenge. It's going to be a challenge, but start in a small and reasonable way and start in a way that will be able to be scaled in many different aspects, would be my recommendation.

Mitchel Macnair: 

Yeah. I guess what I would add to that is, you don't have to assess on everything. Yeah. The low fidelity of self-reporting. If you have low data, that's better than nothing. Yeah, you run the risk of somebody being George Costanza. I'm a marine biologist, right? You run that risk. 

But the other part of that is their professional reputation is on the line. So you know that there is something there to hold that back. But what I would say is, identify critical areas where you feel like you need to have an assessment. If you can partner with an external organization and it's some sort of a formal assessment or micro badge or micro-credentialing that you say, Hey, that meets our standard and that's what we're going to use to really verify that somebody has those skills. That's another route that you could take to make it a little bit of a lighter lift for your organization.

Mark Hanson: 

Yeah, absolutely. And a lot of this data can be inferred from, some of the public data that's available and from what we pull through in our profile and job posting data. And so you can do that high level surveying, even without that and then some of your systems are already going to be collecting it. I would say the biggest thing to solve for right away is that just the identification of skills before we start assessing is a great spot to start.

Mitchel Macnair: 

A thing on that I'll share that I've heard some people talking about is a passive assessment. Which means if you have been in this role for two years, there's no way that you could be successful in this role if you haven't gained these skills or haven't demonstrated those skills.

And so that's a passive assessment, which is based upon a time frame that says, hey, we're going to add these skills to your profile automatically after a certain period of time. If you know that job and you know somebody is going through certain activities. Again, if their performance is doing well, then you should be able to automatically let the system add those skills to their profile, which is another way to think about it, but it reduces the manual input needed from an individual.

Mark Hanson: 

Thank you both so much. This has been a great conversation and I love the topics that we've covered. Hopefully this was valuable for everybody and we look forward to the next one we do. So we'll get that invite out in a few weeks here. So thanks everybody for joining and appreciate all the time.

Rachel Sederberg: 

Thank you for having me.

Mitchel Macnair: 

Bye-bye.