Skills-based strategies are transforming the workplace into a more dynamic, adaptable, and equitable environment. Learn why business leaders are focusing on skills, what strategies they’re adopting, and how AI is enabling this shift—based on insights from Workday research.
Josh Tarr
Director, Skills-Based Organization
Workday
The world of work is undergoing a dramatic transformation, fueled by the rise of AI, a shortage of specialized talent in many sectors, and a widening skills gap. To compete in this new era, where human and digital workers must collaborate to drive success, business leaders are turning to skills-based strategies as a way to create a more resilient and agile workforce.
This shift is underscored by our recent study, The Global State of Skills, which revealed that 51% of business leaders are concerned about a looming talent shortage, with only 32% in agreement that their organization possesses the skills needed for future success.
Organizations must adapt or risk being left behind. The good news is that many are already taking action, with 55% of organizations worldwide already on the journey to becoming a skills-based organization, and another 23% planning to do so within the next 12 months.
This growing momentum reflects a recognition that skills-based strategies are essential for navigating the complexities of the modern workforce. Not only that, organizations are already starting to see results. But what exactly are skills-based strategies, why are they so crucial in today's environment, and what use cases are leaders from around the world starting to use in their own organization?
For anyone looking to develop a deeper understanding of the what, why, and how of key skills-based strategies, or those planning to take their first steps, this blog can help.
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Skills-based strategies are transforming the workplace into a more dynamic, adaptable, and equitable environment. Not only does a skills-based approach benefit organizations and their employees, it provides an alternative approach to identifying and developing talent within wider society.
While a focus on skills in the workplace is not new, the convergence of workplace transformation, better access to insights as a result of AI, and the evolution of how workers navigate their careers makes it more relevant than ever.
Organizations Thrive: By organizing work around what people can actually accomplish rather than outdated job descriptions and traditional qualifications, organizations unlock agility and resilience. The key expected benefits cited by leaders in our study include:
Employees Flourish: Better alignment between employee strengths and business objectives can lead to increased engagement and motivation, while skills-based hiring and internal mobility practices help to provide more opportunities. Looking at how business leaders answered, the key expected benefits are:
Society Benefits: Skills-based strategies have far-reaching positive implications for society as a whole, from increased economic mobility and opportunity to lower levels of unemployment as a result of organizations tapping into talent pools that are normally overlooked. Business leaders agree that the benefits of a skills-based organization go beyond just productivity and growth, which include:
By removing traditional constructs of what makes someone qualified, and focusing on the skills needed to do the work at hand, these strategies foster a more agile, innovative, and resilient workforce. But how can leaders effectively put these strategies into action? Let's explore three key approaches that leading organizations are adopting to unlock the full potential of their workforce and navigate the future of work with confidence.
Three Key Strategies
Only 54% of business leaders say that they have a clear view of skills within their organization.
What It Is: Skill identification is the process of identifying and confirming the skills that exist within an organization (skills supply) and the skills that are most important to the jobs and work the organization carries out (skills demand).
Why It Matters: Skill identification is a foundational step in skills-based transformation as it provides insights to make informed decisions about hiring, training, and development.
How It Works: This is typically done by using AI to infer highly relevant skills from various data sources, including job descriptions, resumes, business processes, and labor market information. These skills are then confirmed with relevant stakeholders to build a company-specific taxonomy, or categorization of skills data.
How Best Buy Canada Uses Skill Identification to Drive Career Growth and Retention
Challenge:
Improve retention and career development by matching employees to opportunities based on skills.
Solution:
Results:
86% of leaders say they are comfortable with hiring candidates based on their skill profile.
What It Is: Skills-based hiring is a method of recruitment that prioritizes a candidate's skills over their formal credentials or job titles.
Why It Matters: Using degrees, past employers, and previous job titles gives an incomplete picture of whether or not a candidate can do the work required. Examining the skills a candidate has gained and examples of how they have demonstrated those skills provides hiring managers a more precise evaluation and increases the pool of potential candidates.
How It Works: Once the critical skills for the jobs in an organization are confirmed through a skills inventory, those capabilities are used as the focus of the hiring process, ensuring that candidates are evaluated consistently. Organizations often develop interview guides, craft behavior-based interview questions, and provide training to interviewers to execute a successful skills-based hiring approach.
How Workday Uses Skills Data to Drive Quality, Speed, and Candidate Experience in Hiring
Challenge:
Improve Quality of Hire by implementing skills-based hiring for all roles at Workday.
Solution:
Results:
Only 32% of respondents in our study strongly believe that the skills in their organization today are the ones that they will need for future success, which is why 95% of organizations report they have upskilling and reskilling efforts underway.
What It Is: Upskilling and reskilling programs develop workers' skills and prepare them to enhance their performance as the responsibilities of their current role changes, or for new roles that are created within the organization.
Why It Matters: Existing jobs and skills are changing so rapidly that organizations are likely to struggle filling open roles before the requirements become outdated. Findings from the Workday Global Workforce Report also found that internal hires are 80% more likely to be rated as a “top performer” in their first calibration in their new role compared to external hires.
How It Works: Organizations focus learning solutions on the skills they have identified as most important for job performance, and match workers to the upskilling and reskilling opportunities that align to their career aspirations and current strengths. This personalization enables workers to spend their time developing the right skills for driving business outcomes and enhancing their career prospects, while also allowing organizations to optimize their learning and development costs.
How Ferring International Created a Culture of Continuous Learning and Development
Challenge:
Connect workers with high-quality recommendations for training, development opportunities, and job openings.
Solution:
Optimize talent mobility by matching candidates to internal jobs and gigs
Identify critical skills gaps, particularly in key areas of research and development
Ensure global compliance in a highly regulated industry with diverse HR legislations
Results:
272 gigs posted to Talent Marketplace in 8 months
63% increase in Talent Marketplace adoption
90% of gigs fully staffed
Skills-based strategies have been an aspiration of HR and business leaders around the world for years, but they have only become a tangible reality in the age of AI. Not only is AI redefining the skills needed to succeed in the current world of work—and emphasizing the importance of uniquely human skills—it’s also accelerating the transition to a skills-based future.
When asked about the role of AI in their transition to becoming a skills-based organization, 83% of executives believe AI can help to mitigate skills shortages. Other top benefits include:
Leveraging the latest developments in AI makes it possible for business leaders to develop an accurate picture of skills in real time, free up more time for their employees to focus on developing the skills that matter today, and retain top talent by matching them with growth and mentoring opportunities across the organization.
Whether your organization is well underway with skills-based strategies or just getting started, the future of work is undeniably skills-based.
To effectively deploy talent, organizations need a deep understanding of the tasks and skills required for specific roles. As the workforce evolves to include both human and AI agents, skills take on a new level of importance. Organizations must identify the skills needed by both human and digital workers and deploy them strategically to achieve their goals.
By embracing skills-based strategies, organizations can build a future-ready workforce that thrives in the ever-changing landscape of work. This approach benefits organizations by increasing agility and resilience, supercharges employees by empowering them to develop the skills for success, and unlocks a wider scope of talent across society. It's a win-win that paves the way for a more productive, innovative, and fulfilling work experience for all.
Download “The Global State of Skills” to learn more about the evolving skills landscape, and explore how Workday can help to support your transition to a skills-based organization.
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