Becoming a Skills-Based Organization

What is a skills-based organization?

Skills-based organizations use skills to provide direction for their talent decisions. This involves defining roles, talent, and learning with a common skills language. Skills are the building blocks to role requirements, connectors between one role and another, and they are constantly changing. Organizations who understand how skills will support their future workforce goals are equipped to access, build, and retain the talent they need. 

Companies can begin to become a skills-based organization by following these first three steps: 

1. Level-set and plan

2. Find quick wins

3. Solidify your business case and demonstrate ROI

Want to learn more? Watch our webinar to build your roadmap to becoming a skills-based organization.

In this webinar, Will Markow, Elizabeth Crofoot, and Mark Hanson discuss 3 steps to building a skills-based organization including planning, quick wins, and ROI.

1:07 Background on Lightcast and Skills

3:50 Intros

6:18 Why become a skills based org?

9:16 What's the impact on the bottom line/ROI?

10:50 Step 1: Level-set and plan

12:33 Roadmap to becoming a skills based org

21:15 Step 2: Find quick wins

23:10 Where are we seeing quick wins?

36:15 Step 3: Solidify your business case and demonstrate ROI

36:50 Example ROIs

38:48 Building a business case with economic uncertainty

46:25 How can skills enhance your existing HR tech?

52:30 Closing thoughts

Watch the full recording: https://www.youtube.com/watch?v=WcGu0l-GVEI

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Connect with us to identify your roadblocks, create a strategic plan, and achieve your goals.

Transcript:

Will Markow:

Hi everybody. Welcome to our webinar today. My name is Will Markow, and I lead our research and consulting services at Lightcast. I'm really thrilled to have this conversation with you all today. And really excited that you all were able to take some time out of your busy day to join us. I think that the topic we're talking about around becoming a skills-based organization is top of mind for many organizations, both within and outside of HR. Right now, I think that there's a lot that needs to be demystified around what it actually means to become a skills-based organization and what steps you can take as an organization to actually become more skills-based in some of your hiring practices. And so that's really what we want to do today is start to demystify. What are some of the key steps that you can take to become skills-based so that you can actually start to build that roadmap to integrating more skills-based practices into your talent management?

Just before we dive too far in, I wanted to give you a little bit of background about Lightcast and why we're thinking about the importance of becoming a skills-based organization.

At Lightcast we really strive to be the world's leading authority when it comes to job skills, workforce data, and talent intelligence. And we believe that in order to make better decisions, you need better data about your workforce. And so we are going to be drawing from both a lot of our expertise working with organizations who are trying to become skills-based, as well as developing skills-based data sets that can help to illuminate some of the key trends that we're seeing across the workforce as it relates to the evolution of skill requirements in every industry and every location across the globe.

Just to dive a little bit deeper into what it is we're talking about today, and why it's important to think about becoming a skills-based organization, how to do that in a sensible way. I think we first need to address the elephant in the room, that skills-based organization has become a huge buzzword, and not everybody knows what that actually means.

Many organizations are rushing to become skills-based because they think it will give them a recruiting advantage. They think it might improve employee retention or save money, but they don't necessarily know how to do that in practice, and they don't always appreciate that the reality is becoming a skills-based organization is not just as easy as flipping a switch.

It requires multi-discipline change across many different stakeholders, across many different teams throughout the organization, and it takes time to implement some of these changes. It also adds a tremendous amount of complexity on the technical and data infrastructure that HR teams need to operate within.

So becoming skills-based is not without its challenges. But the good news is the benefits are real. There are a few simple steps that you can take to become a skills-based organization, and you're probably going to see some very strong returns on your skills-based initiatives if they're done in an intentional and thoughtful way.

The other good news is that if you think you're behind everyone else, you're almost certainly not. Very few organizations have really invested a tremendous amount of effort and thought into becoming a skills-based organization and have gotten to the point where everything is humming along nicely. Most organizations are just beginning their skills-based journey, and so if you think you're behind your peers, the good news is you're probably not.

They're probably in the exact same boat as you, and in order to move things along in your skills-based initiatives, we really need to start to unpack: What are the specific steps that you can take to become skills-based? And that's really the goal of our webinar today, and it's why I'm really thrilled to have both Elizabeth Crofoot and Mark Hanson join me for this discussion today because the two of you, I would argue, are the foremost thinkers on becoming a skills-based organization.

They've worked with many different organizations to help them become skills-based and I’m really thrilled to have this discussion with both of them today. So I'll not be able to do them justice. I'll let them introduce themselves. And maybe Elizabeth if you'd like to start with a quick introduction for yourself.

Elizabeth Crofoot: 

Sure. Thanks so much Will, I'm so excited to be here today. I am Elizabeth Crofoot, senior economist here at Lightcast. I started my career as an economist at the Bureau of Labor Statistics, and I have 20 years now of experience analyzing US and global labor market data, and about half that time I've spent researching labor market and talent shortages and working with companies to address those challenges.

And specifically here at Lightcast, now I'm working with clients on their skills-based talent needs, both in the US and across global markets.

Mark Hanson: 

Thank you, Elizabeth. Yeah, excited to be here everyone. Mark Hanson. I help lead a lot of our skills work here at Lightcast. Been here about four years and it's just been a pleasure to work on new skills products and a bunch of our consulting deliverables and just advising and guiding clients through this journey.

Previously, I was a Lightcast customer for five years when I was leading people analytics and talent intelligence at United Health Group. So I’ve been on both sides of the table being a practitioner going through lots of skills-based changes in the specific role at United, and then now getting to help out our awesome customers here.

And previously, I led a lot of different management consulting work and different leadership consulting, advisory work. And yeah, just excited to have this discussion today and hopefully it'll be helpful.

Will Markow: 

Great. Really thrilled to have you both as part of this discussion. Really excited to have your expertise for this conversation.

And Mark, I think, was being a little bit humble. I think of him as the godfather of all things skills-based. I think he was thinking about becoming a skills-based organization years before. So really thrilled to have you and Elizabeth as part of this discussion.

But just before we dive into some of the specific steps, I wanted to take a couple of minutes to just provide some context around why it even matters to become skills-based. I think many of the people who are here today probably already have a good idea for why it's beneficial to become a skills-based organization.

But just want to reiterate, why it actually matters. And the first thing to keep in mind is that, skills-based organizations, they are more resilient in the face of change. We are constantly seeing the economy and our workforce evolve, whether it's due to new technologies such as Chat GPT, or other AI-based solutions, whether it's due to once in a generation events like a pandemic that completely alters the world of work.

Any of the other factors that are shifting the way we need to think about our workforce and the way we need to think about the work our organizations need to do to remain competitive. And that evolution in the workforce is not being reflected in just headcount or just job titles. It's really being reflected in the underlying skills that are required of our workers.

And so if we want to be able to keep a pulse on those changes in the workforce and adapt to them as rapidly as possible, we need to take a skills-based lens to our workforce to better understand how those underlying skill sets are evolving and what we need to do in order to keep pace with that rapid change.

Now once you have started to take this skills-based lens in your workforce, it also unlocks some very specific tactical benefits as well to your organization. For one, you can start to recruit more strategically because you can move past the legacy mindset of hiring for a specific degree requirement or hiring for somebody who had the exact same job title that you're looking for.

And you can actually get recruiters and hiring managers speaking the same language, which is not always easy to do, and really focus on what matters for a particular role. And that's going to dramatically expand the potential candidate pools you can tap into, it can expand the diversity of the talent pools you tap into, and it can reduce the cost and time to fill for some of the roles you're trying to recruit.

Of course, once you have people in the door, you can also take a skills-based approach to engage and grow them more effectively. If you have a clear line of sight into what skills are needed across different roles within your organization, then you can give people a very clear path to developing capabilities that will both benefit the company, but also benefit them as individuals as they look to grow in their careers.

And this is a great way to incentivize and reward learning. It's a great way to build out career pathways between roles in your organization, and that can be a key to unlocking greater internal mobility. Of course, these are all great benefits to talk about. I think we all probably can see why they're beneficial, but eventually somebody is probably going to ask what's the impact on the bottom line?

And the answer is, taking a skills-based approach to workforce planning can have tremendous impacts on the bottom line, and you can save a tremendous amount of money if you implement some of these skills-based strategies. Just a few examples of things that we've witnessed within organizations are companies that have just taken a few simple skills-based strategies and been able to save, in some cases, millions or tens of millions of dollars on talent acquisition costs across their organization.

We've seen companies that have saved millions of dollars because they decided to invest in building future-ready skill sets as opposed to just going out and buying those skills on the spot market for talent. And we've also seen that for some targeted roles, organizations can save $10,000, $15,000, $20,000 or more per hire if they just make a few simple shifts in the skill sets and the credentials that they're asking for within their job descriptions.

And so if you need to demonstrate the impact on the bottom line of becoming a skills-based organization to the C-Suite or anyone in your organization, the good news is the benefits are real, and the financial benefits can have a dramatic impact across the organization. So I think that being able to demonstrate that is one of the things we're going to talk about later on today and how to actually take the ROI-based approach to advocating for skills-based initiatives.

But now I really want to dive into the meat and potatoes of the discussion today and talk about some of the steps that we're seeing organizations take to successfully implement skills-based initiatives. And the first is really level setting at the outset and building a plan and a roadmap for how to become a skills-based organization.

I can't tell you how many companies start their skills-based journey by throwing money at some new fancy technology, often with AI something in the marketing material. And this is a terrific way to spend a lot of money and potentially not have a great ROI at the outset to show for it.

There's a reason why we say people, process, and technology in that order and not technology first. Many companies have started by investing in a new technological tool that maybe a vendor told them was a great way to become skills-based. Or maybe they thought, “Hey, everybody else is doing this, so I have to do it before I'm the last kid on the block.”

But, if you invest in that technology without having a clear plan for how you're going to leverage that skills-based technology, then I usually liken this to buying a Tesla for a toddler. It's going to look and sound great, it's going to cost a lot of money, and it's just going to sit in the garage collecting dust until the kid learns how to drive it.

And the same is true for investing in new technologies that you haven't fully thought through how your organization is going to utilize it. Or determining whether you even have people on staff with the skills necessary to leverage it without having to get locked into months and months, if not years of hefty implementation fees.

So the better way to do this is to start by intentionally building a roadmap for how you plan to become a skills-based organization and how you plan to find quick wins and actually develop a strong business case for the skills-based initiatives that you want to implement. And so I think this might be a great place to bring in Elizabeth and Mark to the conversation because I'd love to get your perspective on how you're seeing organizations think about becoming a skills-based organization and why they're even thinking about this at all? Why do they feel that it's important for them to become a skills-based organization and how are they thinking about building out some of these roadmaps? So maybe Elizabeth, love to get your perspective on that. And then Mark, if you have anything to add, I'd love to get that as well.

Elizabeth Crofoot: 

Yeah, that's a great question. And for me, level setting, a lot of it is about just making sure you have the foundation in place to move forward with the skills-based organization. So that means having a skills ontology and the data, right?

So with the skills ontology, just make sure you have a common language of skills, one that is dynamic and that's synced with the labor market, and of course aligned with other parts of the business as well. So if you don't have all of those parts right, it's about HR really delivering value and not just doing HR things for the sake of HR, right?

It's about solving a business problem and making sure that you are talking the same speak as other parts of the organization. And then secondly, the data sources, ensuring you know where your data is coming from and how that is flowing throughout the organization. And there's really, I'd like to think about four different aspects of data, right?

You have internal versus external data. Internal data can be your current skill demands based on your job descriptions or if you have the feasibility of doing some sort of skill assessment that can all be part of your data that you're working with to build out your trajectory for the skills-based focus.

But external data is so key, especially labor market information. Other information about the competitors in your market, about the skills that are in demand from their perspective, because our external data is going to create context or provide context and also directionality.

And then second, current information versus future, right? You definitely want to know what your capabilities are, your skills and capabilities today, but where do you want to go in the future, two, three, five years out. And so that future focus and having the data sources that get you to see, what are my skill sets today? What are they going to be in the future? 

And then that's going to drive the strategy behind how to fill in that gap. So Mark, I just want to know what you think about that as well.

Mark Hanson: 

Yeah. What we're often hearing when we work with our customers is really focusing on that diagnosis stage.

How are we talking about skills internally, which teams are talking about it? And so sometimes before you even jump into where your data is, it's good to do this in tandem, is to just start interviewing your stakeholders across the org. Many times there's pockets of L&D that are discussing this.

Obviously talent acquisition has been discussing skills for years, but to broaden that out to a little bit wider base to your talent management teams, to your leadership teams, to getting your CHRO in a conversation to say, we just went through this huge pandemic. We had to make some really tough decisions in a really short timeframe.

Some of it was probably knee jerk reactions and, going after different, maybe just jumping right to, oh, we gotta cut people to save money. Versus thinking like, oh, what are our strategic talent needs today? What is our business focus? How has it shifted through the pandemic and saying, who else is talking about this?

Because often we're finding that different pockets of the organization are in silos, and they're buying technologies that are trying to solve a skills problem, but it's not a holistic approach. And nobody has rolled this up to the leaders to say, what are the biggest questions that we're asking? What are those strategic initiatives that we need to focus on?

We need to create this alignment. And at the same time, just as what Elizabeth said, we need to dive into our data. We need to dive into our systems. Where is this? How can we start to bring this all together? Not only the technology and the data components, but also the conversations. And that can start to build the stakeholder buy-in, the roadshow of getting these ideas out on the table and really getting the priorities and incentives and hopefully the right resources to put behind all this.

So that diagnose stage is really important to make sure you're covering your bases so you're not recreating the same problems that you develop when you're under the high stress impact of a global pandemic or other economic shifts that we're seeing today.

Will Markow: 

So it sounds like there's a very strong relational aspect to this.

Before you're even talking about any of the data and any of the technical infrastructure, first, you need to get the relational and the change management piece figured out. Otherwise, no matter what technological advancements you throw at it or what data you throw at it, it's probably going to fall flat. So I'm wondering, are there any other common pitfalls that you're seeing organizations running into when they try to build that relational piece or maybe not in building it, is the challenge? Or, and are there any opportunities or best practices where you're seeing the organizations that are building those strong relational ties with other business leaders?

How are they doing it?

Elizabeth Crofoot: 

Mark, do you want to jump in or…

Mark Hanson: Happy to! Yeah. What we've seen a lot is finance makes a lot of the quick decisions because it's all dollars based. And so if we can do some education and bring the teams together, this is where the CHRO or Chief People Officer is so critical.

These conversations, because they're in the C-suite talking with the CFO and the other operations leaders to say, “Hey, we've been making decisions one way in the past. How do we shift this thinking? What are the big changes and shifts we need to make so that we can make a really holistic change around becoming a skills base?”

But we need to start with that education of what does skills base mean and what components is it going to touch. More than ever, the talent management component is really a huge focus for companies because we need to retain people, as we've seen with massive layoffs and people being more mobile than ever to be poached and to be pulled over to other companies.

It's getting really expensive. The turnover and the rehire of that cycle is so expensive. So talent acquisition is still important, but we've seen a shift with most of our customers. We need to focus on our people. We need to focus on those retention strategies. But to break down those silos, we need to educate some of those other parties that do have very strong sway within the orgs, particularly finance to say, let's show you what this ideally could look like in a fully optimized world.

Let's show you how we can start to manage talent more effectively from a skills approach versus just moving people around on a spreadsheet. We need to look at our talent more holistically. We need to look at our learning more holistically, our retention strategy and our mobility strategy more holistically.

And if we can get down to that granular level, this starts to answer a lot of questions that have been brought up, but nobody's really had good answers. And so if we can start to provide those answers, we have a really unique opportunity from the people analytics and the talent acquisition and the L&D purviews to educate the entire org on why this is important.

Elizabeth Crofoot: 

Yeah, and just to quickly add on to that. Will, you were talking about pitfalls, and Mark alluded to this as well, it's just this inability to change, right? You have legacy systems, legacy ways of thinking, and it's really a philosophy change of knowing we have to change the way that we ultimately organize work and feed it through different business processes, right? So that's one major barrier. 

And the other is just the speed of change that we're seeing. And Will, you talked about this at the onset, just organizations are struggling to keep pace with the ever evolving skills and they're moving so fast and now you are going to need talent that can dissect Chat GPT and all that just came on board. So how are you going to work with that new technology? 

So I think just change in general is a huge barrier, and getting through that is what is going to make the quick wins possible.

Will Markow: 

Yeah. No. Yeah, I think that makes a lot of sense. And yeah, I think that's a perfect segway as well into the next step, which really is how do you actually lock in some of those quick wins? Because I think that, to your point, it's very important to make sure that we have this cross-functional, cross domain set of relationships that we're building as part of the initial planning phase and the stakeholder holder engagement phase. But eventually you're going to have to show something for your efforts and we're going to have to move to the action phase if we want these skill-based initiatives to prosper. And just a little bit of context here is that I think the good news is there's no shortage of skills-based use cases.

I'm not going to rattle off every one of these dozens of different things that somebody can do, but I think most organizations recognize there are many different ways that taking a skills-based approach to traditional talent management processes, talent acquisition processes, et cetera can be beneficial.

But I think that a lot of companies really. Struggling to find those quick wins, even though in theory they can see how it's beneficial. They often will find that implementing new skills-based initiatives is taking a very long time. Sometimes we're hearing people say that they just can't find enough people to take the skills assessment.

They've had it open for months and can't get more than a 30 or 40% response rate. Or in some cases companies are just having a difficult time connecting all the disparate systems with different skills, taxonomies, and libraries to one another, and just getting them to play nicely with one another.

And I think that's something that has started to dissuade a lot of people from really going all in on becoming skills-based. But I know we have seen companies achieve quick wins. They definitely are possible. 

There are many different types of use cases and I'd be curious, maybe Mark, to get your thoughts on, where are you seeing these quick wins? How are you seeing organizations start to notch a few quick benefits from their skills-based initiatives, and are there any common threads in how companies are notching those quick wins?

Mark Hanson: 

Yeah, absolutely. And the key to all of this is to get really focused and really small when you first start.

Our theme at United was if you call anything a POC or a pilot, it's usually going to get approved because it has less of an impact on the broader teams and the efficiency and the operation costs that are going along with that. And I would say really dial in and target what are your key roles that you need to focus on in the next year? What's the highest turnover roles? What's your strategic growth roles? What are the ones that are really critical for retention? Because maybe they're hard to find in the market, or it's driving a key strategy for your business. Narrow in on those one or two roles that are really critical, and then really go deep and talk with the stakeholders and leaders within those orgs and say, we want to try something here.

We want to set up a really good deep dive into understanding the skills needed for these roles. We want to understand the complexity of what's going on in the external labor market to say, is this hard to fill talent? Is this something we really need to focus on? Retention and driving more targeted learning strategies towards this group because we really do need to retain them because it's so expensive to hire them into roles.

And then really talking with the leaders to say, what have been your pain points? Often what we're seeing is even just asking some simple questions to the leaders to say, “Hey, you know that you had 25% turnover last year. Did you know what skills left your building?” We know what job titles are left. Were those critical? Are we seeing big operational gaps now? And have we struggled to find that? Have you thought about defining your roles from a skill perspective to really get granular on what is driving us into the future? What new technologies or coding languages or whatever it might be for that particular role that's going to drive us to the next level of our strategic plans.

And those can, most often what we're hearing is companies don't know what skills just left their four walls, or they had some internal movement and now they have this gap that they didn't anticipate. And it's, that person was our Python expert, and we didn't really capture that anywhere.

We don't have a mechanism to do that. Those are perfect opportunities to say, how do we start to look at the skills of our employees? How do we start to look at skills within our job architecture and start to create those plans around that? But the key here is to start small and very targeted so that you can develop those ROI metrics.

And as you roadshow that across your executives, that's going to give you the fodder that you need to get resourcing for the next phases and get hopefully, large budget dollars behind it.

Elizabeth Crofoot: 

Yeah. Just to piggyback on what Mark said, I think we see a couple of pockets or types of companies that are using the skills-based organization or going towards an approach of skills-based, and one of them are those companies that are using it as a short-term or tactical way of addressing a very urgent business problem.

That's where those quick wins are most attainable. And one company, for example, that we worked with recently, a manufacturing company that was updating its job architecture really to increase competitiveness and avoid layoffs. So we were helping them to map their skills to their jobs and as we were re-architecturing their roles.

And the quick win in this case is that they had a clear business problem. They were falling behind their competitors and the technologies, and they had a lot of momentum in place. It was a very targeted problem. They also had C-Suite buy-in. A very strong leader. And all of that, a short timeline as well.

It was a very focused project where they were trying to move from more of a project based structure for their work to more product focused. So all of those components together and just the sheer focus and the short timeline, made a very quick win. And those are the types of projects that really provide the leverage to continue to expand the skills-based focus to other parts of the organization and to address other urgent needs.

Will Markow: 

Yeah, it is a really great example. And you mentioned that they are, there was strong C-Suite buy-in. For that initiative, and you didn't say this, but it sounded like it might've been implied. The C-suite was not the CHRO. And I'm curious to get a sense for when we're looking at these quick wins, are there any natural partners in crime outside of HR where HR leaders can find other executives or business line leaders who are commonly dealing with talent challenges that are just uniquely, well-suited to some of these skills-based approaches?

Mark Hanson: 

Yeah, absolutely. A big one on the operation side is the Chief Operating Officer. They have the big purse strings that they're trying to manage and drive the strategic goals of the company. So outside of finance, which we've already mentioned, any of the operations leaders, they are making the final decisions on that talent from a holistic standpoint.

Obviously the CHRO is involved, from a talent strategy perspective, but it's really the ops leaders that are driving a lot of the key initiatives. And if you can get the buy-in and show them the value of where we are going, how are we going to improve our turnover numbers or our retention numbers? How are we thinking about bringing in better quality candidates? 

And, let's try a quick win project around job posting optimization. We had a really cool project that we did for a med device company. And after analyzing their historic job postings, they had just had a whole bunch of fluff language in there talking about the company and the good that they're doing, which is all wonderful. But they realized we could probably put that on a landing page that doesn't need to be in every single job posting. 

Let's really dial in the posting because we're really trying to drive candidate flow. And what most people don't think about with some of this work is AI is driving so much of the candidate experience. If somebody lands in a job board, you're filling out a profile, there's background AI that's suggesting jobs to you. So if your job postings are not dialed in from a skill perspective, and you have a lot of this fluff language that doesn't really pertain to that role and what you actually need, you're missing out on key candidates.

And it's not even really your fault. It's the other systems that are flowing, the suggestion of jobs that people should apply for. And we always talk about, can you beat those systems? Can you optimize and get those systems to recognize the better candidates that could be flowing into your career site?

So there's some really simple steps and it doesn't take a lot of resourcing. And you can go to the Chief Operating Officer and say, “Hey, those key technology roles that we keep having this high turnover? Let's really focus on the quality of candidates.” And can we focus on bringing in a better pool of people by getting more skills focused and more distinct on what we're asking for and really getting in, hopefully that quality candidate.

And so they saw a massive increase in this med tech device company and within two months, they saw a better candidate flow, higher candidate flow, and it really made a huge impact on their strategic roles that they were focusing on.

Elizabeth Crofoot: 

Yeah, I think that word strategic is just key, right? And that sort of leads me into strategic workforce planning, and I know we can do an entire webinar on that alone, but it just highlights the different parts of the organization.

Mark, you mentioned finance, obviously HR, operations. Procurement is another one that I would focus on, especially when you're talking about buying gig work or gig workers or freelancers or borrowing talent. Making sure that you're aligned with procurement, especially in terms of the compensation levels and really the strategy behind augmenting your internal workforce with people that are off balance sheet. So it's just critical, like you said, Will, just making sure that all areas of the organization are aligned.

Will Markow: 

Yeah. And it strikes me that everything you're talking about is really focused on tying the skills-based initiative as closely as possible to a real business challenge.

And I think that it's very common. We see a lot of organizations when they think about what are the quick skills-based wins? It almost turns into an IT problem or it turns into a glorified database project where they think, oh, quick win is building this ontology, building this skills library, or getting this technology implemented.

But it's actually the step after that when you're connecting that to the business value. That's how you demonstrate the quick wins and you mentioned that the importance of bringing in other stakeholders and the thing that keeps coming back to me is the famous Churchill quote, never let a good crisis go to waste.

Go find the crisis in your organization. There's going to be a talent crisis somewhere, whether it's in retention, losing good people, whether it's in talent acquisition, whether it's in DEI, wherever it is, it sounds like you're probably going to find a business challenge that is really inherently a people challenge.

So being able to focus on where those are and getting those leaders’ buy-in is going to be key to notching some of those quick wins. I also think that's a…Please go ahead.

Elizabeth Crofoot: 

Let me just jump in with one more example actually, because it's not just those very targeted problems because there's also a group of companies that are going through more of a fundamental change in their philosophy about how they're organizing work and focusing on the value proposition and developing a constant flow of skill building. And that's more of a long-term view of going towards a skill-based organization.

And we did work with one medical device company that was really targeting the L&D function in moving towards a skill-based organization. So mapping their skills ontology and their proficiency levels to learning objectives. And, we layered competitive benchmarking on top of that.

So ultimately, what are the skills that are in demand within their organization across their competitors, across the market... And all of that went to really informing their L&D strategy for filling in those skill gaps. 

So it can be more of a long-term approach that can be a quick win. They did move very quickly with their skills assessment, with their data analysis, and again, getting some C-suite buy-in.

So initially there was a lot of momentum. So I think that's also a possibility if companies are thinking more holistically or more philosophically about the reasons why they're going into a skill-based focus.

Will Markow: 

Yeah. So it sounds like there can be both the short-term and the longer term view that companies are notching some of these quick wins.

Mark Hanson: 

And one more thing I would add is it doesn't have to be historical, fire drills that you're being pulled into. Some of our innovative companies, we worked with one insurance company where they were really thinking, what are the roles of the future? And how do we prepare for the future of work?

And they were trying to define these roles. They're like, how do we define these future roles? We kind of know that it's going to be more technology based, more AI based, but we need to start transitioning and having a three to five year plan to take our existing workforce, which we know will be disrupted by robotics and AI and everything else.

How do we move them to the future? And really the natural progression of that conversation went to: from a skills-based perspective, we can define these roles even before we've created those job titles, and we can start to see what we anticipate the technology being. What do we anticipate these roles dealing with on a daily basis?

And that created these archetype roles to help prepare them. And that started to influence their L&D strategy, their talent acquisition strategy, and their internal mobility strategy for re-skilling efforts to say, how do we move people from here to there to get ready for these future needs that we know we're going to have, so that we don't get caught off guard with technology disruption or economic disruption for our business.

And so again, I have this nice background of these skill profiles. What does that look like? This is exactly what it could be, existing roles or a future role to start archetyping out. What are those skills that we're going to need and how do we take the people in those talent pools today and move them from where they are to where they need them to be?

And a lot of times it does take three to five years for some of those more technical roles. So let's be preparing for those future needs along with, obviously putting out the fire drills of today. 

Will Markow: Yeah, it is really interesting. And in that case, it sounds like what I described earlier as a database project.

It becomes a quick win when you have the end goal in mind at the outset because you already know how you're going to leverage it. Then it's easier to actually bring some value out of that exercise. 

I think that might be a good segue just into the third step, which is really solidifying your business case and demonstrating how you're bringing value out of these skills-based initiatives through a concrete set of ROI metrics. I think this is a pretty common challenge for many of our organizations that we work with. Once they start the skills-based initiatives, they need to be able to demonstrate the value of those initiatives.

And I think that many organizations have not yet built muscle memory internally around how to demonstrate ROI from some of these initiatives. But I think that many of the most common places where we're seeing companies start to identify the use cases that drive the highest ROI fall somewhere within, the realm of optimizing one of the Bs when it comes to talent development strategy.

We talk about four Bs: buy, build, borrow, bot. Some companies talk about more Bs. There's bind, there is no shortage of Bs. But I think the notion here is that there are different levers you can pull to really try to optimize your talent development strategy and drive a high ROI on some of your talent development initiatives, all of which are enhanced or amplified by taking a skills-based approach to developing your talent. Just a concrete example that I know we've seen in many different organizations. Mark, I think you, you mentioned this as one of the possible quick wins, is if you can quickly right size your job descriptions, taking a skills-based hiring approach, you can see some really quick and high ROI wins.

This is an actual example from a company that was trying to rightsize some of its cybersecurity job requirements. And they found that just removing a bachelor's requirement could save on average $16,000 per cybersecurity analyst hire, and it expanded their potential entry level candidate pool by 61%.

We saw that they also found specific skills and certifications. That if they took them out, they could see savings of $5,000, $10,000, $15,000 or more in some cases, just by removing one high value, in-demand, and under supplied skill that was really nice to have and not a need to have. And we've definitely seen organizations be able to demonstrate the ROI and solidify their business case.

I'm curious to get both of your thoughts. Given just the macroeconomic backdrop of high inflation and rising interest rates and just the general tenor of economic uncertainty right now. Is it still viable to build a strong business case for skills-based initiatives? And what is that value that companies are really looking to capture from their skills-based initiatives?

Maybe Mark, I'd love to get your thoughts on that, and then Elizabeth as well.

Mark Hanson: 

Yeah, and it builds off what we've said before. It's more critical than ever. Especially after we all went through the pandemic and businesses were making those knee-jerk reactions for cutting people and not knowing what skills left their four walls and how do we prepare when things do get back in order? Which we didn't have the purview of when that was going to end, but it rebounded relatively quickly for most companies, as some of the pockets of companies were not impacted as much as others, and they needed to re-engage and start hiring rapidly to bring back all the increased demand for their products and services. So they did these big wild swings and it was very costly. So as you prepare for the future and this uncertainty that we're dealing with with inflation and just whether we're going to go into recession or not, it's just a very unique position.

Elizabeth has done lots of really cool webinars and different talks on the broader economic climate. But from a company perspective, it's saying how do we future proof our needs internally? And if we can get our data to the right spot in terms of our job architecture. The skills flowing through our systems, looking at people and how we're assessing that talent, how we're categorizing and understanding that talent from a skill perspective, it gives you the supply and demand of skills within your own workforce to make much better data-driven decisions around your talent versus just saying, oh, we gotta cut this entire department because it's no longer relevant.

It's no. If we do have a lens on this, even if it's a sample lens of what skills are in that. We won't ever know a hundred percent of the most current, accurate skills for our employees, but we can infer a lot of those skills and we can say, “Hey, in general, these types of roles have these skills.”

Have we thought about the long term impact if we do have to cut that division or that group of folks within this talent pool, how do we make sure that we’re shifting it to another area of the business where we do have a lot of open roles or we do have increased demand?

That skill lens will help you be much more strategic, not fall victim to letting a whole group of people go that really had strong talent that your need for these other roles. And if we can align that through our system, that gives visibility to all the different operations leaders and the talent leaders to give visibility to what is in our four walls and how we can strategically shift that talent around. And the more you can build the ROI cases on those quick win projects allows you to start to roadshow this and preview it with other internal stakeholders to say, this skills lens does make a difference. We're always going to be dealing with uncertainty in the labor market. We're always going to be dealing with the need to cut costs in different areas, but how do we really retain that talent that's going to be critical for our future growth and for our future initiatives? We need to take this approach, otherwise we're going to be stuck and it's going to be even more expensive if we don't start taking some steps in this direction.

Elizabeth Crofoot: 

Yeah, I mean that uncertainty Mark that you mentioned in the labor market, I really see that in terms of a dichotomy that we're seeing.

On one hand, we have a lot of companies that are struggling with labor shortages, and on the other hand, we have companies that are laying off workers. And the interesting thing is that a skills-based strategy helps you with both cases. So with the shortages, for example, you can go to a skills-based hiring approach.

In terms of retention, skill-based career pathing to really keep those workers and give them more visibility into the opportunities in your organization. And, Mark to what you said about shifting resources around the organization. That's how you avoid laying off workers, right?

You need to move workers from one area of the business that is seeing softening demand to the area of the business that has more robust demand. And that's just a win-win. No one wants the negative publicity of layoffs and it's bad for the brand, it's bad for the workers, it's bad for the bottom line.

So the skills-based approach is really key in dealing with the vagaries of the labor market and being able to be agile and adjust to anything that's thrown your way.

Will Markow: 

Yeah. There's a great example I think of a few years ago, there's a technology company that we worked with. And Elizabeth, to your point, some companies are dealing with talent shortages, some companies are dealing with laying off workers. This company, somewhat inadvertently, was dealing with both. They made a strategic pivot. They laid off around 20% to 30% of their workforce. And then realized that due to their strategic pivot, they then needed to hire back many of the people they just laid off because they no longer had the skills necessary to act on that strategic pivot.

And this is actually what brought them to us because they said we can't make that mistake again. We need to know what skills we have. We need line of sight into what skills we have so that we don't inadvertently chop off an important piece of our workforce.

And I'm wondering how you're seeing companies make that case? Are there certain ROI metrics or certain things that companies are really trying to focus on? As Mark said, when they go on that road show internally to demonstrate the value of some of these initiatives,. Hopefully before they have to realize, whoops, we just lost a lot of people we really needed for our strategic goals.

Elizabeth Crofoot: 

Yeah. And I think it boils down to a lot of the metrics that you see on the slide here, right? And, what are the labor cost savings to reducing degree requirements and eliminating certification requirements and doing skill-based hiring? All of that is part of the labor cost saving. 

But what's hidden is the benefit you get from increasing the diversity of your workforce, right? The innovation, the creativity, all of those secondary effects of doing these types of approaches in order to really expand your talent pool and get as many people with different mindsets involved. And that's what it takes to pivot quickly, is that type of agility that comes from having a very diverse workforce.

Will Markow: 

Awesome. That's a great point. And I know a couple years ago too, we'd done some research where we looked at some of the companies that were most innovative and that were pivoting the fastest. And we compared them to some of their more legacy peers. They had, I think it was something like 30% to 40% more emphasis on emerging, future-ready skills that were enabling those strategic pivots. And so, when you segment out some of those companies that are most successful at pivoting and adapting to change, you really see the difference when you look within their skill DNA. What seems to be driving that change?

Consistently, the companies that do make those pivots seem to have more future-ready skills. Maybe, one last question I have here is, we talked a little bit about the broader ecosystem in which these skills-based initiatives are occurring, both in terms of different departments, different teams. But I'm also curious to know about the different technological investments that HR teams or other teams have already invested in, and whether taking the skills-based approach and building more of a skills-based philosophy across your organization can also help you bring more value out of some of those other investments. And if so, how are you seeing organizations do that?

Mark Hanson: 

Yeah, I can jump in. One of the most popular ones is buying a new L&D, LMS, LVP, or the full learning experience platform for your employees.

Often, there's a really good learning strategy behind that. There's often the data teams and the reporting teams get left behind in some of those decisions. So, advice I'd say is that if you've purchased a new L&D recently is to make sure you get your data and your analytics and reporting teams onboard because one of the things that you're missing out on is, as your employees start to interact with that, most of the learning systems out there today will have some sort of inventory or profiling set up to enter in skills. And that's a key spot when interacting with your employees that you can start capturing some of that data. 

And actually, I've yet to see this work really well for a lot of our customers. It is being able to capture that in a centralized location so that you can start to mine that data effectively and start to make some decisions from it.

And also, what is the seed data going into that learning system? When an employee logs into that system, are they aware of the skills that are important for their role? A big miss that a lot of our companies are experiencing is they're like, “Hey, we got to go after and get our employee skills. We’ve got to get inventories of them, we need to get a hundred percent of our employees to go in and have them fill out some sort of skill survey so that we can capture this”

What you don't realize often is yes, in theory that's a really good first step. But what you're bringing into your data systems then is their entire career history and only a small fraction of the skills that they have actually applied to the role they're in. 

Particularly, for more senior roles where somebody's maybe had three or four different career paths. They've had a whole bunch of wonderful experiences and great skill sets that benefit the company as a whole. But for that particular role, what are those skills that are needed to execute effectively on that? And how do we take advantage of that? 

One of the better spots for our companies to start at is really doing a full exercise to build skill profiles on their job architecture so they can feed those LXP and LMS systems. So when an employee logs in, they don't just blurt out all skills that they have from their background. 

It's okay, let's capture those, but did you know that these skills are critical for this role? How proficient are you in those skills? Let's highlight which ones you need to improve upon, or let's validate that you do have those, and let's get that into our system so that we can start to flow through and do that skill gap analysis.

Because you really need both sides of the coin. You need the employee skills, but you also need the skills that are needed to actually run your organization. Often it's easier to start at the job architecture side, and that is going to directly benefit the seed skill data that goes into those LXPs. The other popular system that we've seen companies buying is a talent marketplace or the more holistic talent management systems out there. And that is another critical spot where that could be helping you with talent mobility or helping you with, even mentorship matching or some of the gig work around different project resourcing or just contract labor.

Where do we put those projects into a centralized system? Another perfect opportunity for your employees to be presented with: here's the skills that are expected, what are you bringing to the table holistically, and how do we start to match you to those different opportunities? And then how does that system flow through to our centralized reporting?

You are really thinking about those two more popular systems. Obviously applicant tracking systems have been around forever. There's also some good opportunities there to start mining data more effectively from the resumes that are coming in, from some of the internal application data that's coming in.

So, be thinking about that entire tech stack. Has your reporting team been brought into those? Often we're seeing they haven't been brought in or they’re brought in too late, and you're having to reconfigure some of those systems. Again, get this conversation started early across your team so that any technology purchases, that process and the people involved do get brought into that holistic picture.

Elizabeth Crofoot: 

Yeah, that's a great point. And I just wanted to add that oftentimes clients use their products or technology to focus on employees' current skills. And I just want to highlight that adjacent skills are so important, especially when you're thinking about developing those workers, those candidates into other roles.

The fear here is that you could end up just awarding or rewarding those workers that are the most highly skilled and not paying as much attention to potential, right? Potential workers and movements across the organization. So I just wanted to call that out, that you definitely want to have those adjacencies in mind when you're doing your role architectures and your L&D strategic plans, so that those workers are also moving through the pipeline as well.

Will Markow: 

Got it. Yeah, it makes a lot of sense. And it sounds really to bring the most value out of your skills-based initiatives, you need the relationship piece. You also need to focus on the broader ecosystem of tools that you're leveraging. All of the people within the organization who may have skill adjacent capabilities and just really take a more holistic approach to connecting your skills-based initiatives to the broader talent ecosystem in which you're operating. 

I realize we're coming up on time, so I just wanted to end with a couple of last thoughts here because I think a lot of companies, they will often let inertia creep in and say, we really need to change things dramatically, this is just going to be too big of an undertaking.

So, what happens if you don't apply a skills-based strategy to some of the things that we're talking about? And I think the reality is that if you don't start to shift your view of your workforce to more of a skills-based perspective, you're really going to be making decisions without all visibility into your workforce and the impact that some of those decisions are going to have on your workforce.

So this is really akin to navigating without a compass. And so, I think that companies that are taking more of a skills-based approach are going to have far more and better understanding of what their company currently has in terms of capabilities, how they can rapidly redeploy those capabilities in the face of technological change or other strategic pivots that they have to make.

And that's going to have many follow on benefits across both their talent decisions, but also their broader business decisions as well. I just want to take another minute to just thank Mark and Elizabeth for joining this discussion. Really appreciated having your insights. I also want to thank everybody who was able to join today.

Hopefully this conversation was useful for you as you start to embark upon your own skills-based initiatives. And if there's anything else that we didn't cover that you'd like to discuss more with us, or if you just want to continue the conversation, please feel free to reach out to us. You can go to lightcast.io or feel free to get in touch with us directly.

We're always happy to have more conversations around how organizations can improve their skills based initiatives. So thank you again so much for joining us today. We really enjoyed the conversation. I hope you did as well, and thank you again, and hope to see you next time. Have a great day.