Skills-first HR: Mastering talent management in the digital age

One in five skills requested for the average job is an entirely new requirement in that occupation while nearly three-quarters of jobs changed more between 2019 to 2021 than in any previous three-year period.

These figures from research by BCG, The Burning Glass Institute and Emsi Burning Glass, are why organisations no longer have any choice but to develop a skills-based strategy, says David Collings, chair of sustainable business at Trinity Business School at the University of Dublin.

“We’re seeing new skill sets in demand. We’re seeing different skill sets in demand. And the pace of change is really quick. So as organisations we are struggling with how we ensure that we have the skills and capabilities we need as we look forward to where our business is growing,” he says.

The answer he offers is what he calls skills-first HR – being more dynamic and agile in how we match people and work.

“What we're increasingly seeing is organisations thinking about skills as a currency. It’s about trying to link those skills with organisational strategy. It's an attempt to be more agile in that matching process,” says Collings.

In other words, breaking away from traditional job structures and rigid job hierarchies, thinking more fluidly in terms of how we align people and work. And what this does is to shift the conversation from qualifications and experience to skills.

This, says Collings, can lead to a more diverse workforce. He notes how Zurich Insurance moved from hiring graduates of elite universities to setting up an apprenticeship programme, which resulted in more diversity and effectiveness within their teams.

In this video Collings discusses why skills-first HR is vital to organisations today. He explains how this approach necessitates a proactive stance from HR, anticipating future skills needs. And he looks at some of the barriers and how to overcome them.

Like this? Then check out these videos in the series on how to deal with major disruptions and why HR leaders must drive strategic transformation.

This conversation was recorded as part of CHRO’s Idea Incubator – a collaborative initiative hosted by King’s Business School, Trinity College Dublin and the Center for Executive Succession at Darla Moore Business School, University of South Carolina.

Transcript

Skills shortages aren’t new – the speed of change is

The skills shortages that many organizations are facing currently aren't exactly new. think, you know, we look at reports over the last 10, 15 years, see it back as far McKinsey's war for talent in the late nineties. You know, that was something that was driving that research. So skills shortages in themselves aren't new. I think what's different though is, the pace of change of skills. And I think if you talk to anybody in tech in particular,

The speed, look at the evolution of generative PTs like ChatGPT and the like over the last couple of months alone. The pace of change is just scary. And I think what we are seeing is that those skill sets that are being in demand in those sectors are changing so quickly that it's a real challenge for organizations to keep up to speed. You know, there's some work done by the Boston Consulting Group and Burning Glass in the US that looks at the key skills that are called out in job descriptions and 20% of the skills that are looked for job descriptions currently didn't even exist five, six years ago. So we've seen really new skill sets in the band, different skill sets in the band. And I think the pace of change is really, really quick. 

Why skills must replace jobs as the currency of work

So I think from an organisational perspective, they're really struggling with how do we ensure that we have this gap and skills and capabilities that we need as we look forward to where our business is growing. I think what we're increasingly seeing is organisations thinking about skills as a currency for how they match people and work. And it really is an approach that's about trying to link those skills with organisational strategy. It's an attempt to be more agile in that matching process. kind of breaking away from traditional job structures and job hierarchies that were quite rigid and trying to think more fluidly in terms of how we align people and work. 

And it really shifts the conversation from qualification and experience to skills. So trying to move away from some of those rigidities and try to be much more dynamic and agile in terms of how we match people and work, I guess, is the one liner of how we think about it. If we focus on experience and qualifications that by definition brings a certain profile of people into our organisations. So for example, you know, how many organisations focused on only recruiting from elite universities in the past? You know, there's a typical demographic that finds themselves in those elite universities that's often not particularly diverse, right? 

It also impacts from a broader gender diversity perspective, for example, where people that we know that males are more highly represented in digital IT type courses. Well, maybe if we can find different entry routes into those professions, it really can shift the dial.

One great example I saw recently is from Zurich insurance. So Zurich insurance were looking at their data or some of their technical teams where they had traditionally hired from elite universities and now have an apprenticeship programme. And they told me that that's been transformative on the profile of the folks in their teams now. And what they found was actually having those qualifications was a pretty poor predictor of effectiveness. But people that were smart, really motivated to learn, and partnered with the right people as part of that apprenticeship process came into the organisation and flourished in those technological roles, which was really interesting to see. 

How rigid HR structures block skills-first thinking

A lot of our traditional structures in HR are quite rigid and don't really map well to this kind of dynamic skills-based approach. So for example, centers of excellence, where we tend to have narrow expertise in reward or talent in our HR teams. If we want to move towards the skills first, the bridge, well, skills need to be the driver, the kind of currency that we use. And sometimes those kinds of internal structures can work against that. So it can be quite siloed and quite rigid in terms of how we think about those different parts where we really need to challenge how we traditionally done some things from a HR point of view to enable that skills first agenda. 

It's also changing mindset for managers because internal and title marketplaces are great but if Shannon's in my team and she's one of my top performers and she suddenly wants to present 40% of her time working on this project, then I need to be open and willing to share Shannon and for her not to be available to me for that time. So it really is a challenge for managers. 

The manager mindset shift that skills-first requires

And I think we really need to reinforce the value for managers of, you know, freeing people up. There's some interesting research being published recently that didn't look directly at kind of internal talent marketplaces, but looked at managers that developed a reputation for being good at developing people. And actually you found that the benefits to them in terms of people wanting to come and work on their team far outweighed the loss of talent when they move people along. So intuitively that makes sense, right? But I think a lot of us would be more likely to hoard our good people for fear we'd lose out. So I think there's certainly a manager issue there.

I have two other things that I think are challenges. we need to change our kind of our orientation towards time. And that's what we tend to get. And duck within HR is reactive, right? So we're, always trying to keep the lights on. We're always stretching to meet skills requirements for today. We really need to keep watchful eye on the future for this skills first approach to work. really is about, you know, thinking forward, reskilling, upskilling, helping meet those, those skills demands as we look forward.

Why imperfect skills data is better than no data

And the final point I would say that we're seeing in our research is the challenges around data and having good quality data, knowing what to do with it. And the skills in HR teams, which I think have moved forward significantly over the last number years, it's a space where HR has grown a lot. But there's still some areas where HR has some growth potential, but really getting around that data story. So good quality data.

A typical example being, know, doing a skills audit to understand the skills and capabilities my employees have right now. We found most organisations that we spoke to had to get employees to self-identify those skills initially to get up and running. Right. And we can imagine that's far from perfect. You know, there's no validation of those skills, but to me that's a great example of where perfection can be the enemy of the good. 

So I think to get projects off the ground I would definitely start there rather than wait for perfect data, and refine it and develop it as we go along. And we see more organisations thinking about how AI can kind of, infer some skills from the work we do linking with learning systems where their learning systems tied to skills we develop and validate them. But certainly that that question is really key to enabling a skills first approach. So t's all driven by the business strategy and where the business is going. And then they'd identifying a really good place to start.

Practical steps to building a skills-based organisation

And then there's, there's kind of, and we touched on them as we go along, but there's kind of a couple of key things organisations need to do. They need a skills taxonomy. They need language. They need a skills audit. We need to understand the skills and capabilities we have. We need a good sense of demands, right? So some of that is internal demand as we understand where our business is going and what's happening. Well, we see a lot more focus on external demand.

So understanding the external labour market, the external supply of skills, where those skills are, where the pressure points are likely to be. What are the skills that are coming down the tracks in your competitor organisations? What are they recruiting for? And I think that's often a blind spot for organisations. So they may have a sense of where they're going in the skills they need internally, but it's often a blind spot in terms of where the sector is going or where supply is. that's a critical part of it.

And then the last kind of building block is really thinking about job structure and job design and ensuring that that works. So, so there are the kind of building blocks that that come once you, once you identify that strategy. And really then it's having the tools and the data to enable the journey. think at any sort of scale, this isn't something that works, you know, in Excel. This isn't something that works, you know, without some investment in technology, which is one of the challenges.

What is CHRO's Incubator?

We're super excited about this event, which is a collaboration, but with King's College London, the University of South Carolina and ourselves in Trinity College Dublin to bring together some, you know, some thought leaders in this space and, and thought leaders that are actually doing work in this space as opposed to academics to talk about it. I'm going to be joined on a panel by Steve Collinson, who's the CEO at Seward UK, who are doing some really cool and interesting work in the skilled space and has a great story to tell.

And also Thomas Jeppesen who's the head of HR for the Lego foundation, who has some really interesting thoughts about how the skills developed through play in childhood can translate into skills for work. So I think we're going to have a fascinating conversation in that space. I'm really excited about it. I know my colleagues are leading some very interesting discussions around culture and HR leadership and disruption. So I think it's going to be a really great day for senior HR leaders to come together and learn from some of their really leading practitioners in the area, particularly of skills in the context of my session.