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The U.S. automobile industry provides employment to 1.7 million individuals, with 99% of the vehicles currently in use being powered by gasoline. This poses a significant challenge for HR departments. However, a transformative shift is on the horizon. There are plans in place to ensure that electric vehicles make up half of all new car sales by 2030. This shift will lead to the displacement of millions of jobs while simultaneously necessitating the creation of thousands of new ones.
Welcome to the dynamic landscape of the modern labor market. With technology advancing at an unprecedented pace, job security is increasingly precarious. The rapid evolution is further propelled by the advent of AI, leaving companies in a state of flux. While new job roles emerge constantly, some become obsolete within months rather than years.
To adapt to these changes, businesses must undergo a fundamental shift in mindset: farewell to rigid job descriptions and hello to a skills-centric approach.
Traditionally, organizations have managed their workforce based on strict job descriptions. However, the practice of hiring and firing based on ever-evolving job requirements has become increasingly challenging. As a result, progressive companies are embracing a strategy centered around skills, viewing employees as versatile repositories of skills rather than fixed job titles.
For instance, an employee at an automotive company may specialize in gasoline engine production. However, they likely possess a myriad of skills that are transferable to electric vehicle manufacturing with equal efficacy.
While skills are more intricate and challenging to quantify, they offer significant advantages to both employers and employees in today’s dynamic landscape. When European conglomerate Henkel embarked on reskilling its workforce, it identified a staggering 52,000 skills, many of which were vital in an increasingly digital economy.
The shift towards a skills-based talent approach presents challenges (and opportunities) across various industries. Yet, many organizations struggle to identify the skills they lack, understand how specific skills impact business outcomes, and determine the reskilling and upskilling programs needed.
Drawing from my experience as a co-founder of an HR tech firm that leverages people data to assess companies through a skills-focused lens, I have witnessed the transformative impact of transitioning from job-centric to expertise-centric practices. To embark on this journey, consider these three crucial steps.
First, Assess Your Current Skill Inventory.
Beware when a company announces it is in “hiring mode.” While expanding the workforce may seem logical, it often prioritizes tasks over skills. A more prudent approach is to evaluate whether your existing skill set can address the business challenges at hand.
Unilever exemplified this by creating an internal talent marketplace that enables employees to contribute their skills wherever needed. This initiative unlocked 700,000 work hours for approximately 3,000 tasks, reducing the need for new hires and boosting productivity by 40%.
Utilizing people analytics, businesses can methodically assess their skill inventory. Compile a comprehensive list of skills and compare them against job functions to identify gaps. This insight enables informed decisions on reskilling, redeployment, or recruitment, serving as the cornerstone for internal and external job postings.
While companies may recognize skill deficiencies at a broad level, their understanding of specific job disruptions is often vague. In a survey, nearly 90% of companies acknowledged existing or anticipated knowledge gaps, yet lacked clarity on roles susceptible to disruption.
Phase 2: Anticipate Future Skill Requirements.
Forecasting future skill needs is as critical as understanding current capabilities. Without a strategic approach, even forward-thinking companies can be caught off guard.
For instance, in 2023, over 250,000 tech workers were laid off in the U.S., marking a 50% increase from the previous year. Major corporations like Amazon, Google, and Meta also grapple with similar challenges. Could proactive planning have mitigated such workforce upheavals?
Skill-based workforce planning offers a solution by categorizing skills trending in specific industries, enabling businesses to align their talent pool with evolving demands. Predictive models, employed by skill-based platforms, forecast shifts in skill demand, such as the decline of traditional programming skills and the rise of AI collaboration skills. While not an exact science, these insights empower companies to adapt to technological disruptions effectively.
Phase 3: Invest in Reskilling and Upskilling Initiatives.
Embracing reskilling and upskilling, rather than solely relying on hiring and firing, is essential for maximizing the benefits of a skills-focused approach. Consider PepsiCo, which launched an academy providing free online skill training to its 300,000 employees. In the first year, over 11,000 employees earned certifications in roles like blog stability engineer and data scientist.
Similarly, Walmart and Amazon have initiated programs to upskill their massive workforce, offering training in data analytics, programming, and strategic thinking. These efforts reflect a broader trend of companies investing in employee development to stay ahead of technological disruptions.
Employees value these initiatives, with a significant percentage relying on employer-led skill development to advance their careers. The majority believe that their employers should contribute to their reskilling to prevent being replaced by AI.
What are the Returns on Prioritizing Skills Development?
The benefits of adopting a skills-centric approach to talent development are manifold. Nearly 95% of businesses surveyed by Deloitte emphasized the importance of shifting focus from tasks to skills for their success.
Skill-based organizations demonstrate enhanced effectiveness and competitiveness, adept at aligning talent with organizational needs. They exhibit agility in adapting to change, outperforming traditional roles-based structures.
Data indicates that skill-based organizations are 57% more adept at anticipating and responding to change, 52% more likely to innovate, and over twice as effective in talent placement compared to other models. Additional benefits include a broader talent pool, reduced recruitment costs, and increased employee loyalty and retention.
While conventional job roles are unlikely to disappear entirely, forward-thinking companies leveraging people analytics will view roles as fluid collections of competencies supported by adaptable skills.
