The contrarian view on skills-based organizations and skills tech
As an organizational psychologist, I’ve been both fascinated and puzzled by the idea of skills-based organizations. At Salesforce, the people analytics team was working with O*NET, using NLP to do skills extractions from resumes and job descriptions, analyzing skills adjacencies based on skills co-occurrences in resumes, creating skill vector representations of every job, and building different applications of that knowledge over 6 years ago, so it’s fascinating that it’s really taking off now. But I’m puzzled by why now, when this has been a core area of I/O research for decades? What is this movement trying to achieve with the push for skills-based organizations?
- Deloitte says, “By decoupling some work from the job—either by atomizing it into projects or tasks, or broadening it so it’s focused on problems to be solved, outcomes to be achieved, or value to be created—people can be freed from being defined by their jobs and instead be seen as whole individuals with skills and capabilities that can be fluidly deployed to work matching their interests, as well as to evolving business priorities. And by basing people decisions on skills more than jobs, organizations can still have a scalable, manageable, and more equitable way of operating. We call this new operating model for work and the workforce “the skills-based organization.””
Should we be looking at work through the lens of skills versus a job? The answer is a resounding, YES! But let’s break down what they are saying and some insights.
What are jobs?
A job is typically a position of employment where an individual is paid for a set of projects and tasks that need to be completed to drive a desired outcome. In order to complete those projects or tasks, an individual needs to combine their skills with effort and action.
In fact, the idea of a job is relatively new. Through the industrial revolution, common tasks and projects were grouped together to give rise to the concept of a job, and practices of scientific management were developed to more systematically manage productivity and drive greater efficiency. So a job is just a concept manufactured to program/project manage through industrializing organizations.
What’s wrong with the concept of jobs now?
From their perspective, the concept of a job is limiting, and should not define the individual. An individual is more than their skills and capabilities utilized to accomplish his/her job, but also may have interests, desires, and skills outside that job that could be leveraged for organizational and personal gain.
As scientific management became the dominant operating practices in organizations, there was a gradual erosion of the human element of human capital. So our management practices based around jobs and driving scale and efficiency limited the realization of every employees’ full human potential.
What is reorganizing around skills supposed to solve?
As a result, if we focus on skills instead of jobs, we can break down the imaginary walls the concept of a job creates and maximize human potential, while opening up opportunities for more people to participate in work, which will result in greater equity.
This premise presupposes that it is the concept of a job that is standing in the way of maximizing human potential and greater equity. I would say it’s not the job that stands in the way, but the proxies for skills and job readiness organizations have traditionally used to sort through candidates. University degrees, previous company, and job title are the short-hand for job qualification, because previously there was an inability to manually read through all the text of all the resumes to infer skills. Thus, the recent movement to remove university degrees as a job requirement for some jobs, and focus on skills. So it was our heuristics used to sort through candidates for jobs that drove greater inequity, not the concept of a job.
What is this new operating model?
So the idea is that we hire, promote, and develop employees based on skills, but is this a new operating model or the same operating model just focused on a different organizing variable? Are you searching, evaluating, and managing the employee/worker with the same practices?
Herbert Simon, the Noble Prize in Economics winning political scientist, defined organizations as a group of people who work together to pursue specific goals. As such, a skills-based organization is a new name on an old concept manufactured to program/project manage through the current socio-cultural organizational complexity. Skills have always been the foundation of organizations. We’ve always assessed skills and valued skills, but understood the expression of skills through experiences. That’s why structured behavioral interviews are recommended, and why organizations have used skills assessments for decades in their recruiting process. The Bureau of Labor Statistics (BLS) has been breaking down jobs into skills and tasks since 1938, your compensation benchmarking organizations have the similar breakdowns, as well. Skills are fundamental, but skills are not a new concept, and how skills manifest into new jobs or tasks is not new, either.
So what essentially is this skills-based organization concept asking for:
- Instead of using jobs as a primary organizing variable of organizations, use skills
- Value employees as more than cogs in the machine but as whole human beings
- Avoid using limiting heuristics like university degree to quickly assess skill capabilities for roles
Those are great ideals, but pragmatically, how will things change operationally? Most tasks take more than one skill to accomplish, and many similar tasks within organizations tend to be grouped together, and when you employ someone full-time to complete tasks for you, there are economies of scale when you group those similar tasks together for that person to complete. So, isn’t that just a job? At the end of the day, it’s a human trading their time and skill to complete a set of tasks for an organization.
So Why All the Hype?
Remember in the 1990s when it took 13 years and $3 billion to sequence the whole human genome? The promise of the project was that by understanding the whole human genome, researchers could understand the genetic basis for disease and find cures and new treatments to improve human quality of life. Many of the modern day medicines have all that previous investment to thank, but now it takes a day and $3,000 to sequence the entire human genome. While there are many research institutions that find and produce enormous value from those results, for the average layperson, the main interaction with this technology has been services like 23andme for ancestry information, diet and exercise insights, and health predispositions. Interesting, but sometimes a bit too much information.
I see skills and skills taxonomies analogous to genome sequencing. The premise was if we could know all the skills for every employee within the organization, we could develop better career interventions, precision training, better career pathing, more effective mentoring, and the list goes on. For organizational researchers, it’s critical, but for the average employee, they don’t want to know and, actually, want to limit as much of their involvement in the details. They don’t need to know what gene sequence equates to being 87% Han Chinese, they just want to know (if they trust the science) that they shouldn’t have caffeine after 1 pm because they have a heightened caffeine sensitivity. They want the prescribed behavior that leads to the desired outcome. They want results.
Additionally, even if employees cared about the details, most employees don’t know how to fill out their own skills profile. They don’t know where to start, it’s not a language they are accustomed to. It’s like giving someone the map of the human genome and asking them to fill out their base pairs within each gene sequence. Just because you have a unified and harmonized skills taxonomy, is an employee going to know what skills to add without leaving important ones out?
Many are coming to this realization now. Recently, we conducted a survey among our network of customers to forecast the HR trends that are the most overhyped and under delivering and “skills” was at the top of the list. Despite the marketing and appealing to the ideals of HR and learning & development professionals, when you dig into the details and execution of these initiatives, you quickly realize that just because you want it to be true, doesn’t mean that the hiring managers, who are the ones held accountable to their talent decision, are going to go along with it.
It’s an interesting exercise, if you have time and think like an I/O psychologist, but the employee just wants to know how to make work suck less, so he/she can be more fulfilled and provide for his/her family. As technologists, we like to think of technology solutions to solve problems and provide you with technology. As HR professionals, we like to show our work, show we belong at the table making strategic decisions. And as HR Tech professionals, we love technology, solutions, and concepts that show our work while making an impact for HR, and maybe the employees. But this is not a technology issue. It’s a values and behavior issue.
If part of the push around a skills-based organization is valuing the whole person, why not trust the employee to make a good decision? Albert Einstein has been quoted, “Information is not knowledge. The only source of knowledge is experience.” What employees and employers want is collecting experiences that lead to wisdom.
Experience Diversity for Organizational Resilience
Skills-based organizations, while valuable in certain contexts, can inadvertently inhibit organizational process and the future of work in several ways:
- Narrow Skill Focus: As work becomes increasingly transdisciplinary, employees need to possess skills, but more so capabilities that include adaptability, creativity, critical thinking, and collaboration. Rigidly focusing on skills nomenclature can limit an organization's capacity to tackle complex, cross-functional challenges immediately in front of them.
- Lack of Future-readiness: Technology and automation are reshaping industries at an unprecedented pace. How long do you think it will take before your taxonomy becomes outdated? By solely valuing existing skills, organizations may neglect the development of future-ready capabilities required for emerging roles and industries.
- Stifling Innovation and Creativity: The future of work calls for innovative thinking, problem-solving, and creative approaches to complex issues. Fostering a culture of experimentation and exploration is critical, and you can’t career/skills map your way to creativity. As my advisor, Mihaly Csikszentmihalyi, used to tell me, creativity arises with novel combinations across knowledge domains. In his research, he found the most creative people were also the most curious about other domains, and in their moments of flow, their brain would make subconscious connections across domains that would lead to an “ah ha” moment of creativity.
To overcome these limitations, and really free people “from being defined by their jobs and instead be seen as whole individuals with skills and capabilities that can be fluidly deployed to work matching their interests,” it isn’t about skills, it’s about giving people the experiences necessary to build that knowledge. It’s not about the information, it’s about the wisdom created through experience. This broader perspective ensures individuals are equipped with not only the skills, but the mindset, adaptability, and opportunity for creativity needed to thrive in the future of work.
What’s HiredScore’s Perspective
If we are honest with ourselves, outside of some specialized technical skills, the “skills” needed to be successful in a job, role, or organization are limited and known. It is the experience demonstrating those skills that set a person up for success.
That is why HiredScore believes firmly in the concept of a skill-based organization, but has a different approach to activating it and making it successful. Skills are fundamental to how our algorithms work, but showing and explaining our work to the end user through our technology doesn’t add much value. Instead, our internal mobility solution is about presenting opportunities for interesting, new experiences to the employee or their manager. Surfacing known and unknown paths. Making internal opportunities easier to access than external ones.
Then it’s out of the hands of the technology and about the organizational behavior change of encouraging and supporting the less worn paths. Like one of our great customers, GM, Mary Barra started checking fender panels, then lead manufacturing engineering, then lead HR, then product development and supply chain, only to then be made CEO. There are many paths to pursue in a career, but I can almost guarantee you that a two year stint leading HR wasn’t in the typical CEO development roadmap. But she talks about not being so rigid in your career path goals and seizing on those opportunities where you are unsure because all those experiences round out the skill sets that you need to be a great leader.
Call it skills or jobs, but at the end of the day, it’s experiences that create knowledge and wisdom. If the goal is to create a more knowledgeable and resilient organization, it’s not just about stashing and hoarding employees with skills, it’s about stashing and hoarding employees with a variety of experiences so the organization feels as prepared as possible to take on the uncertainty ahead. So the real operating model shift is more cultural and behavioral. Rather than managing employee experiences, shifting to cultivating the conditions that allow an employee to thrive, trusting employees to work hard and make good decisions, and being open and accepting to new experiences. That’s the real hard work, leave the other work to the AI. 🙂
Here’s a checklist of questions to ask yourself as you embark on your skills-based organization journey:
- As an organization, what are the driving reasons we want to move to a skills-based way or working?
- How do you envision those reasons manifesting into actions?
- How will those actions impact key business metrics?
- How is your organization set up to support and execute on those reasons?
- What needs to change culturally, tactically, and operationally in the entire organization, not just HR, to support this new organizational framing? (ex. Budgeting, recruiting, interviewing, management practices)
- How will these changes impact current employees? Have you thought about unintended consequences?
- How will you know you are successful in becoming a skills-based organization? What metrics are you going to use to monitor your progress?
- What is really going to change for employees and candidates compared to the old operating model?
Here’s a case study on how JLL is shifting operating models and going direct to employees with new opportunities by using our internal mobility solution. If you’re interested in learning more, sign up for a demo and let’s connect to help you answer those questions!