How HR leaders can get unstuck on their skills-based transformation

Employers have a skill issue.

A few years ago, it seemed CHROs and CEOs were always talking about becoming a “skills-based organization.” But as ChatGPT took over the world in late 2022, executives, consultants, and academics alike hypothesized that, thanks to AI’s ability to automate tasks, there would be an imperative for companies to focus on how work gets done based on the skills needed to perform it, rather than traditional roles and hierarchies. Thus, the skills hype was born.

But most company-wide transformations fail, and this one was no exception.

“We’ve seen a lot of companies talk about becoming skills based, skills first and the majority of them do not progress beyond pilots,” Suketu Shah, a managing director and member of the people and organization practice at Boston Consulting Group, told HR Brew. He co-authored a white paper examining why companies fail at becoming skills-based organizations, and how to avoid their mistakes.

According to the paper, efforts to become a skills-based organization often fail because they are not tied to the overall business strategy. They are treated like an HR project, without input from other business leaders on planning and implementation, and often peter out in the pilot stages.

“The stuck kind of nature of this comes from the fact that a lot of companies stay very fragmented in their initiatives around this,” Shah said. “They treat the exercise as just creating a skills taxonomy and then running a pilot or getting a technology tool, but not really understanding the business capability you’re trying to build.”

Some companies also start too big, attempting to typify every skill performed by every employee. This can create overwhelm for HR teams and lead to petering out as well.

“For me, it’s the whole, like, ‘How do you eat an elephant? One bite at a time’ analogy,” said Ciara Harrington, chief people officer at digital learning company Skillsoft. “It’s overwhelming. So people look at it… they think about it, and they talk about it, and they have workshops on it, but they don’t actually start to structurally change what they’re working on.”

Getting started

HR leaders should start small, say, with a pilot program in one part of the business. When choosing your guinea pig, Shah stressed the importance of ensuring that the pilot actually serves the needs of the business. For example, software engineers, customer service agents, and marketing associates will likely see more of their day-to-day responsibilities upended by AI than HR or finance professionals.

“I think there are some roles that are going to feel the impact of this movement from AI much more rapidly, where disaggregating roles to more of a skills based taxonomy is going to prove much more beneficial,” said Shah.

HR teams should strive to ensure that skills aren’t just factored into hiring, but also performance reviews, career advancement, compensation, and so on. In order to avoid overcomplicating this process, Harrington said her team decided to track no more than 10 skills per employee at any given time.

“It’s about simplification, right? If you think back to old school competency models, if you’ve ever seen these, they’re spreadsheets upon spreadsheets—it’s really, really difficult,” said Harrington. “We need to get more simple.”

Getting buy-in

HR leaders should also involve colleagues from throughout the business in the planning and execution.

“The more that HR can show value proofs and bring the business along, the better it is,” Shah said, adding, “you don’t want it to be perceived as something HR is pushing just unidirectionally, but rather, we are doing something that ultimately is helping with value creation.”

Skillsoft’s skills-based talent strategy starts at the top, Harrington said. If leaders understand how skills apply to their jobs, they’ll be better equipped to implement a skills-based strategy for their teams.

To that end, Harrington said the company identified five core skills that it will apply to its leaders: think company first, be talent driven, build followership, decide with velocity, and apply analytical judgment. These skills will be used by recruiters when hiring for leadership, and in performance reviews and the company’s upcoming equity and bonus planning cycle.

“We are going to start integrating those into all of our programs, starting now,” Harrington said. “We have our five skills already locked, we've aligned them with our strategy, with our CEO and with our executive leadership team.”

For HR leaders who have yet to execute their own skills transformation, Harrington stressed the importance of just starting somewhere.

“Find a way to take that first step,” she said. “We’re starting with the leaders, that mightn’t be right for every company, but just start somewhere, pick a group, start somewhere, and what you learn, it’s gonna make it so much easier at that point for you to roll it out more broadly.”