Winning organizations have skills in their core strategy

Many CHROs and learning leaders talk about the WHAT of a skills-based approach, although some are already figuring out the HOW. Organizing skills can be complex.

More and more organizations are putting skills and capabilities at the center of their strategy and planning. What is the purpose of a skills strategy? Is it well explained to employees as a foundation for a successful transformation to a skills-based organization?

It consistently emerges as a topic for learning leaders and C-suite related to L&D, talent marketplace, strategic workforce planning, among others, where skills are the common thread in all conversations, but still often struggle to build and execute the skills strategy

We talked about the topic of skills strategy during a roundtable discussion with learning leaders, this article is a reflection of it.

Employee mindset is key to a skills-based approach

Which companies are advancing in skills-based jobs and careers and how are they progressing?

Vatsal Singh, Ph.D. of Samsung Electronics shares his perspective, specifically from the South-East Asian region: 'There is a big change happening, in terms of digital policy change, reforms and evolving customer expectations. The most important thing is whether we are able to help employees understand how they have to change? Developing the right mindset is important. 

To cultivate a change mindset, it is essential to encourage reflection and internalization, emphasizing that this is a stage where individuals must take responsibility for skills development  - Vatsal Singh

Many companies have recognized the importance of this approach through training, coaching, mentoring and fostering a cultural shift. This is because there is a strong relation between employees thinking about what needs to be done and skills development. Building skills and changing mindsets is a slow process, but the direction is clear.

The core is often: “what is the business challenge, what are the goals and what should we achieve together?” And from there, we're trying to redefine who we are as an organization. Communicating and explaining the purpose of skill development to employees is extremely important.

Edward Overzee Gallas MCM of Komensky agrees, acknowledging that their larger clients focus on business model disruption or transformation and that skills provide the flexibility to ensure that people are much more easily retrained. Smaller organizations usually focus on implementing technology, it may be skill related but it is mostly technology focused. Larger organizations are more looking to do it from a vision to implement skills.

Tipping point for a skills strategy

Start-ups and scale-ups are usually not yet focussing on a skills strategy. According to Edward, the tipping point is around 1.000 plus employees, but it could be interesting from 500 employees and up, especially when the organization is in fast moving business and growing exponentially. Every company should find a structure to manage growth

Jan-Willem points out that even for companies starting from 50 employees with strong growth ambition, it could be important to formulate a clear skills strategy as part of the company’s strategy because it delivers multiple benefits from learning culture, recruitment to talent development. This will accelerate growth.

Request for skills

Daniel Nilsson of MuchSkills knows that a Swedish video game developer, based in Stockholm, called DICE (EA Digital Illusions CE AB) - part of EA games, which is successfully using skill-based recruiting. For example, if a team needs a new person, they don't have a role description. Recruitment ask for the required skills and skill levels to add to the team, everything else after that is made up. So recruiting would ask for the skills first and then make something of that. It's super interesting and speeds up the skills first approach.

Capabilities is the new buzzword

Pedro Monteiro of The HEINEKEN Company worked with skills for a while and emphasizes the importance of first knowing what a skill is and what a competency is.

He is experienced in the use of capabilities and that is relatively a new buzzword. Their capabilities framework focuses more on the performance and business impact of the strategy. They know this concept from the supply chain engineers in the organization. For example, an e-learning or training is part of a broader system for high performance organizations.

Leaders don't know what they don't know, they've often seen trainings and webinars. When they think about the needs, they immediately go to the solution which is training or e-learning. It is very difficult to start making better analysis of training needs. This is a bit more challenging for the business, because when I ask: what is important? They say, everything is important. It is more important to know what is essential for the company to achieve goals or avoid major risks.

Skills and learning starts with honest conversations

The capability framework is about honest conversation, because if you just do the e-learning, nothing changes. You need communication, processes and rewards to change behavior. We therefore use 6 points of a high potential organizational model. We also have a number of strategic capabilities, such as cost-conscious and sustainable, to reduce our footprint and improve the balance sheet score.

 Of course there is a difference between blue-collar and white-collar workers, but we have so much content that people didn't use it. So we focused on the context and the conversations, which is why we zoom in on that for a short and tailor-made e-learning. We use a discussion toolkit in the team that managers use to coach and guide the discussion of what they are learning.

People only remember from stories and experiences

Skills are not about the content, because knowledge is easy to get. It's about knowing what you don't know, the framework is understanding the mind maps and having a high quality conversation with an expert to ask the right questions. From the perspective of the brain, people only remember from stories and experiences. This is very powerful and they will never forget it.

Differentiate the definition of skills

Valeriia Zabolotna of Lean Enterprise Institute (LEI) agrees with Pedro. People don't focus much on content on a daily basis, they surf and when they see something interesting they can dive in, but not really. We need to differentiate the definition of skills and competences related to work.

The biggest problem now is that we don't know what professional skills we will need in the near future, but we do know that we need human competencies, such as the 4 C's:  

• Critical System thinking
• Communication
• Collaboration
• Creative thinking

We want to have these skills in our employees and they will not become obsolete. To develop all those skills, in the advancement of AI, education, Ed Tech solutions, how to create that environment and how to leverage it.

Two skills strategies in one company

Daniel recognizes this and explains when creating a Learning & Development strategy for a large organization: “We can spend days discussing specific skills and required levels, but we either need to know what kind of work to plan and what skills or competencies are needed. Or we need for that how do we do really good coaching or mentoring and make sure there is a focus on things that are important to them.”

According to Daniel, two strategies are needed when making smart studies for L&D.

• One is a larger strategy for the companies where you map all the skills and try to understand what the status is and steer centrally for the entire organization. Suppose you discover that solving problems is the most important skill for your organization, then you run a large program for your organization.
• Second, he also think you should have a decentralized strategy. There we enable each leader or manager to create an individualized development plan related to employee tasks or roles. It's great that platforms are connected to AI, but AI doesn't know what I'm doing exactly.

Focus on extra skills that are required to maintain or become the leader in the market

According to Vatsal, collaboration, innovation and problem solving are three skills that are extremely important for an organization worldwide. We talk about it, for example with people from Sales, R&D or in the factory. We try to build those three skills, plus we train on agile for example and have a specific set of skills for sales, logistics, marketing, etc. where we focus on what we called functional competencies.

If you are a market leader and want to maintain that position, you need to develop additional skills. Technology also plays a very important role.

Never a one-size fits all strategy

Steven Gross comments on the discussion of centralization and decentralization of skills and skills identified as being driven across the organization. Companies operating in different markets need a decentralized approach to skills because there will never be a one-size-fits-all strategy.

Steven found from Unilever that what helps is creating an internal talent community or marketplace. Basically you present the strategic projects you have, giving the employees the chance to nominate themselves to work on those projects as part of a skills building program, as well as part of their own career development.

Variety of skills and mentors

Companies can democratize their workforce to pick up other skills and mentors in the organization and to find people. It is a nice addition to the skills building program. At Unilever they created a talent market and placed the U-worker where people could nominate themselves. From a white-collar and blue-collar perspective, we were concerned that technology, automation, and robotics would lead to what we called "blacked-out factories," run from a control room, replacing some workers overtime.

So U-work gave employees the chance to build skills and transition smoothly. It was almost like setting up the U-agency, if your job was redundant you could move to another job in the organization. Unilever assisted in upskilling employees and deploying them to other companies that need these specific skills. This concept was done from a sustainability perspective and created a smooth transition for people who might leave their jobs and gave people the opportunity to work with Unilever, but on a more limited basis. 

The idea was also to create a smaller core organization with a flexible outer core that we could pull in and out.

Employees are open to share demonstrated skills

Workers (79%) are open to sharing demonstrated skills and capabilities types of data and think it's the best criteria organizations should use to make decisions about hiring and deploying workers to work and also indicate they are open to being collected about. 

Edward acknowledges that there are discussions with employee councils of large organizations that are shifting to a skills-based approach and want to use data on employee skills. Usually this is the situation when the company wants to use it for the performance dialogues, when it is really separate to use it for learning for example, then the problem is less obvious.

Edward recently spoke to a large organization that proposed removing the boundaries between learning and performance dialogues, so there are companies that see this differently. He found that the current discussions with the workers' councils are quite intense at the moment. So he does not acknowledge that almost 80% of employees are open to sharing their capabilities data, according to Deloitte .

Key to the skills strategy is that all decisions should be based on collected data and distributed low in the organization

Different models are used for collecting and sharing skill data. Our experience is that you get maximum value from data when data about skills is completely transparent and usable for every employee in the organization. That is why you need solid data governance.

Creating a culture of psychological safety

Vatsal adds that people in the Southeast Asian region still struggle with transparent sharing skills data, especially when people move up to higher positions, they feel uncomfortable when someone says: “you have to learn this and then you have to learn that”. This is where mentoring and coaching and some reflection exercises facilitate group reflexes in small groups that is creating a culture where psychological safety plays a role.

We have probably never given such importance to these aspects, now we say: “this is a new paradigm”.

Every employees should be able to find skilled people in the organization to learn from like a mentor or coach, so you need to be transparent and decentralized with the use of skills data - Jan-Willem Nieuwenhuys

Why a skills strategy is more challenging than you think

One of the questions is how organizations can integrate skills development into the talent acquisition and recruitment process. Grace Z. - ex Microsoft explains that at Canon they have an external recruiting process versus an internal recruiting process.

Personalized development HUB to explore beyond your role

As a large organization, Canon has created a personalized development HUB, with the ability or freedom to discuss with your managers or directors what skills you would like to develop in your role and outside of your role.

In the development HUB there is a kind of skill development with which you can actually complete your CV and work experience. Then you store that historical data, your experience and your talents in different areas and then you are able to share within different groups. It is therefore not limited to your own team in which you work what requires your skills.

Partnerships and guidance of employees is also part of a skills strategy

Canon has partnerships with external agencies to provide training for things like leadership and other skills you want to develop in other areas, even when it's not relevant to your current role or project you're working on. But that's fine. You are able to explore other areas and transfer to them.

There is a team within the company that will help you develop the specific skills you want to gain experience with in a particular area. So, once you've completed your experience, the areas you're interested in and the knowledge you want to know in those areas in the HUB, the HR team can pick that up and guide you step by step. It's not that you quickly jump to another role or department, it helps you gain your knowledge and broaden your interest in what you think you want to develop based on your career path.

Grace shares her experience and continues to speak from an employee's point of view. For example, we currently use our HUB internally at Canon. The HR and talent acquisition team can go ahead and review the data in the HUB. If they're going to hire someone in the area, they'll have some benchmarks and data to look at the skills that might be required for this kind of position.

The opportunity for employees for a new role is transparent, so you know exactly what skills are needed and you need to develop them with targeted training. The benefit of sharing employee data is mutual for both employee and organization.

When it comes to shifting to skills-based work, think evolution, not revolution

What leaders can do when executing a skills strategy 

First, inspire devotion. Measurement is critical, but numbers alone do not lead to new behavior. Senior business leaders, not just HR, should emphasize the importance and urgency of developing skills for every individual, including themselves.

• Encourage buy-in with stories about their own skill-building journey
• Ask senior leaders to participate in training programs and then share their experience with their teams
• Show examples of "skill heroes" making successful career pivots
• Create real business value by building new skills in areas such as data analytics, flexible ways of working or driving generative AI solutions.

Where to begin? Put skill building on the everyday agenda

• Identify company specific skills aligned with the organization strategy and objectives
• Make it a practice to ask, “What would we like to learn as a team and individually?” at the beginning of new assignments
• Encourage team members to identify new skills acquired during weekly team meetings using skills dialogs
• Transform a workforce practice that has the biggest pain point. Be able to address global urgent needs at the same time as we increase the skill level of the entire org based on each individual's most urgent need for self development.
• Start with practices that have the clearest connection to skills
• Get your own skills house in order - defining a skills taxonomy or framework and a common way of validating skills, organizations can lay the groundwork for making decisions about work and workers based more on skills and less on jobs.

Would you like to discuss skills strategy in your team or start with skills management to achieve important objectives and goals? Reach me out here. Let’s improve productivity and engagement of employees by putting your skills centrally in your strategy.

Jan-Willem Nieuwenhuys is Managing Partner of Digital Skilled Professionals and is a trusted advisor in the field of skills management to make organizations future-ready. 

Jan-Willem is also host of the Learning & Skills Management podcast 🔊

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