Skills governance: How leaders are letting skills drive workforce planning

Why some business leaders are shifting away from ‘person-to-job’ thinking in preference for a ‘skills-to-work’ approach.

In recent years, there has been a major transition in workforce planning. In the past, jobs have been the central currency of work – they continue to be the language, the drivers, and the goal of workforce planning. Now, empowered by AI technologies and new organisational processes, business leaders are speaking the language of skills.

These and other insights were uncovered in Mercer’s recent Using Skills Frameworks to Initiate a Skills-Powered Organisation report.

Putting skills at the helm

According to Mercer, skills development was consistently among HR’s top priorities for 2023. But this is nothing new as the same could be said for 2022. Clearly, there is an appetite for upskilling among business leaders.

For instance, 91 per cent of employees are actively seeking to learn new skills. With 98 per cent of HR personnel reporting significant skills shortages in their companies and some claiming there are no signs that the shortages are abating, it seems getting there has proven difficult.

According to Mercer, baking skills development into the fabric of an organisation's operations will require “a new work operating system that supports organisational agility and talent fluidity.” The research relied upon in the report claimed that four key principles should drive the development of these new operating systems, namely:

1. Start with the work (current and future tasks) and not the existing jobs
2. Achieve the optimal combination of humans and automation
3. Consider the full array of human work engagements (e.g., employment, gig, freelance, alliances, projects, other alternative arrangements)
4. Allow talent to “flow” to work versus being limited to fixed, traditional jobs

The idea might seem vague or idealistic, but many organisations are already acting on the new concept. For instance, some companies are shifting away from fixed roles towards more flexible, task-based engagements.

“This approach promises greater talent visibility, more insight into emerging work trends, increased productivity, and improved agility,” said Mercer, “signaling a new talent-management era in which skills-to-work equations replace traditional person-to-job matches.”

Developing a skills framework

Skills frameworks are simply lists of skills relevant to a particular business function, and the plans made to ensure those skills are being fairly represented among employees.

Though there is great variance in the kinds of skills listed among companies, there are generally three broad categories of employee skills, said Mercer.

1. Transversal skills are those which present across a range of functions and businesses with generally high demand – such as project management and presentation skills.
2. Technical or product skills that tend to be more specialised and unique to a particular industry or function, e.g. Microsoft Excel or underwriting.
3. Leadership or behavioural skills – those which revolve around people and leadership.

“No one says they do not have enough [skills] – most have too many, so focus on what can differentiate you or hurt you, because the competition can do it,” a survey participant told Mercer.

Skills governance

While putting the right processes into place is a big part of the equation, without good governance and oversight, it is unlikely that the true benefits of a skills framework will be realised.

While the best governance style will depend on the relevant business and skill type, demonstrations of active interest in skills development among leadership can incentivise broader uptake.

Governance teams should be from a diverse range of functions, respondents said, including representatives from HR, IT, and analytical professionals. It is also crucial that the roles and responsibilities are clear from the outset.

Apart from effective governance, respondents also recommended using the following strategies to build a strong skills framework:

1. Formulate a realistic skills plan
2. Guide AI-based frameworks
3. Prioritise change management
4. Simplify and focus on value creation
5. Address business problems
6. Engage proactively with unions
7. Demonstrate return on investment and relevance
8. Test with a pilot program