Skills Mapping & Strategic Workforce Planning Tools
The Rise of Skills-based Organisations
It’s no secret that the global workforce is currently confronted to a monumental skills shortage crisis. The estimates vary but all point in the same direction. Most organizations are facing significant skills needs. According to a Deloitte report, “73% of business executives expect to continue to experience talent shortages over the next three years”. Another study by Korn Ferry finds that the talent shortage could cost up to $8.5tn to organisations globally by 2030. Employees need to adapt, update and acquire new skills faster than ever before. According to a 2021 Gartner report, 58% of the workforce needs to acquire fresh skills to effectively perform in their job. This amounts to a growing skills mismatch (i.e. the misalignment between the labour supply and the labour demand), which has been widely documented by empirical research.
Compounding this issue, the very nature of work is undergoing a structural shift. At an individual level, employees’ aspirations have undergone profound changes. Career mobility as well as the alignment of skills, work, and values are becoming increasingly important, particularly among younger generations. This gave birth to phenomena like the “Great Resignation” and more recently, “Quiet Quitting”. Amidst this evolving landscape, organizations are experiencing intensified competition for talent in an increasingly challenging economic environment.
Organisations find it difficult to source, retain and manage their talent pool. Worse, they face challenges in assessing their skills base. This difficulty leads to multiple strategic constraints — insufficient identification of future skills gaps, limited flexibility on the operationalization of projects in the context of changing business priorities, impossibility to efficiently design leadership succession career plans at the organisation-level etc. The importance of skills within organisation is thus growing. The emergence of skills-based organizations has become a major theme in business literature in recent years. The static view of work (where an individual equals standardized knowledge equals a task) is being replaced, at least in theory if not yet in practice, by an evolving perspective in which skills become the criterion by which companies evaluate and allocate their talent pool.
In response to these monumental challenges, a new wave of tech-enabled products has emerged, poised to facilitate the widespread adoption of skills-based strategies in talent management, recruitment, and resource allocation.
The Promise of Tech-Enabled Skills Mapping Products: Rethinking Talent Management at Scale
The emergence of skills-based organizations is prompting a comprehensive redesign of traditional processes across the entire talent lifecycle.
These tech-enabled skills mapping and strategic workforce planning tools aim to do so in 4 key areas.
Skills Assessment, Detection & Mapping
The value proposition of a lot of these products is to empower organizations to dynamically map their available skills. Unlike static taxonomies, dynamic ontologies theoretically evolve with the constantly changing skills landscape of the workforce. This enables real-time monitoring of the skills pool and facilitates detailed comparisons with peers, both at the individual and organizational levels. A lot of companies in the mapping below leverage AI to scale their skills inference — scrapping through employee data (annual performance reviews, CV, internal docs and projects they worked on) to extract their skillset (and even sometimes the proficiency levels of these employees in these skills, although this remains a challenge). This skills data layer finds application both at the functional level (within business units) and at the HR-level, enabling them to build out their skills architecture and competency mapping.
Talent Recruitment, Deployment & Allocation
This skills architecture then serves as a foundation and can be broken down into several use cases, the first of which being skills-based talent sourcing and candidate assessment. These products aim to place skills at the core basis of recruiting. It allows (i) for more unbiased processes (fostering diversity) and enables (ii) reduced cost-to-hire due to limited early mismatch between job description and pre-selected candidates.
A second use case relates to the allocation of talent, once recruited, within the company by placing skills, internal requirements, and individual employee aspirations at the forefront.. There are many applications for this, depending on the company’s value proposition: skills-based staffing, internal talent marketplace, functional or geographic mobility, etc.
Talent Development & Career Planning
Internal Talent Marketplaces and skills-based staffing within these products empower employees to actively chart their career trajectories within the organization, effectively reducing turnover. Data-driven upskilling and reskilling plans support employees in their career progression, ensuring alignment with the company’s evolving needs.
Many companies have set up competency-based career pathing schemes for their employees (that fuels into the design of key success profiles), in order to break the hire-fire-or-retire cycle and improve employee engagement. Conversely, by matching skills to roles and career paths, companies can maximize their talent potential.
“Skills-based practices can help employers upskill workers and provide learning opportunities to enable internal mobility and boost retention. Employers can design customized onboarding programs (adapting existing programs where possible) to meet new hires where they are and ensure they have the skills to succeed in the long term, provide on-the-job training and continuous-learning programs, and develop internal road maps to promotion from entry-level roles without requiring a degree.” (Source: McKinsey, 2022)
Organization-wide Strategic Workforce Management:
These products empower HR departments to adopt a more strategic approach to their workforce management. They assist in forecasting future skills requirements and gaps through succession planning, dynamic recruitment plans, and more precise business forecasts, thereby enabling HR to optimize their resources efficiently.
As Josh Bersin puts it, this is the premise: “Under the covers of this concept is the idea that we can “tag” or “assess” everyone’s skills with laser precision. And many of the AI tools (…) promise to do this today. How do they assess our skills? They use the magic of AI to look at our job history, performance, work product, and other sources to infer, model, and predict what we’re good at, what we’re exceptionally good at, and what we need to learn next.” But the reality is different, as he points out. (Source)
Challenges and the Road Ahead
While tech-enabled skills mapping products hold immense promise, several challenges must be navigated for their successful adoption:
Insufficient Tech Maturity: despite significant advances in AI-enabled technology for skills detection and inference, it remains in its early stages. The intense competition for AI talent has led to uneven progress among players in this space. Assessing proficiency levels, with no human intervention is still challenging for some products. So is inferring soft skills, that are more difficult to assess.
Cultural Reluctance & Employee Adoption: the transition towards skills-based strategies often necessitates deep-seated cultural changes within organizations. This cultural shift can be a protracted process, demanding commitment from all levels, especially HR and managers, to embrace the new paradigm. Similarly, achieving accurate skills mapping heavily relies on attaining high employee adoption rates. Convincing employees to actively engage in these processes remains an ongoing challenge. Some companies are exploring innovative strategies to encourage employee participation.
Go-to-Market Strategy & Market Readability: we’re seeing a lot of different go-to-market strategies in the space- bottom up via line managers to HR, top-down from corporate to business units. Identifying the dedicated budget and pinpointing the appropriate persona within organizations, be it Learning & Development or Talent departments, can be a complex decision fraught with uncertainty. The proliferation of players in this space, each with seemingly similar value propositions, has generated low market readability for HR buyers, and we expect consolidation in the years to come or integration from other players going up the value chain (e.g. 360learning buying eLamp).
Skills mapping landscape
As the workforce landscape continues to evolve at a rapid pace, skills mapping products are poised to become indispensable tools for organizations striving to navigate the monumental skills shortage crisis effectively. However, the organisations’ cultural adoption (at the HR/corporate level as well as at the functional business level), the go-to-market strategies of these players (L&D Top Down ? Bottom Up through business units? entering via one use case like recruitment vs. full packaged offering?) and the way the market will evolve (further consolidation? One use case-focused category leaders vs. all-in-one skills platform from hiring to offboarding?) are exciting market developments to monitor.
If you’re building in that space, do not hesitate to reach out to me :)
