"Skills-based organization": Is it just another hashtag for organizational design consultants, or a genuine structural evolution for companies placing skills at the heart of their HR strategy?
Beyond the rhetorical question, the link between competitiveness and skills, which also includes organizations' ability to adapt to their economic environment, is stronger than ever today due to the growing need for agility.
1. A Skills-Based Organization to Strengthen Competitiveness
Many industrial sectors face significant skill-related challenges for well-known reasons: digital and environmental transitions, labor shortages, mismatches between workforce skills and current/future needs, an aging workforce, and the increasingly rapid obsolescence of skills.
This demand for skills is not merely cyclical but also structural: shorter cycles, successive crises, and constant uncertainty have become the new norm. In this context, the ability to address these changes is a key strength of high-performing organizations. Mastery of current and future skills lies at the heart of adaptability and organizational performance.
Companies must ensure they have the necessary skills to face market evolution.
“Skills are the ROI of training.”
Human resources are often referred to as "human capital," as they are assets available to the company, akin to financial and physical assets. However, human capital does not appear on the balance sheet as an asset. Yet valuing human capital means enhancing the value of what the company excels at—its expertise—built over time through the accumulation of skills and its unique way of mobilizing these abilities.
This is the challenge for training and HR initiatives: they are recorded as expenses rather than investments that generate ROI. Expenses are optimized, but investments are expected to yield returns.
From an organizational perspective, skills should be the expected ROI of training. While estimating the ROI of skill development actions can be complex, it’s easier to calculate the costs of not upskilling: reduced productivity, lost markets, etc. In a dynamic competitive environment, failing to upskill means not stagnating but regressing.
Thus, moving towards a skills-based organization means treating human resources as a strategic asset at the heart of the company’s growth.
2. Implications for HR Policy
If skills are a strategic asset, what does this mean for HR departments?
The traditional allocation of human resources assigns individuals to predefined roles outlined in job descriptions. In a dynamic environment with a skills-based approach, resource allocation focuses on assembling the right skills—internal and external—for project teams. This requires significant agility and continuous identification of available skills.
Work becomes a series of activities that provide learning opportunities to demonstrate, acquire, or maintain skills. Meta-skills like learning to learn or knowledge transfer accelerate organizational adaptation in this context.
Shifting to a "skills supply chain" mindset.
A dynamic view of the organization also involves moving from a resource stock mindset to a flow mindset, enabling anticipation of skill flows. This includes managing employee departures, which result in skill loss, and addressing skill obsolescence due to market demands or non-utilization.
3. Conditions for Implementing a Skills-Based Organization
In a skills-based organization, the focus shifts from roles to skills, requiring:
Anticipating skill needs rather than job vacancies. This allows for temporary mobility, project-based work, and leveraging freelancers or contractors alongside internal employees. The "total workforce management" approach views the company as an open ecosystem that assembles necessary skills based on project demands.
Promoting broad, cross-functional internal mobility. Initially, this requires reliable, ongoing skill identification. Next, it involves enabling skill transfers beyond expected career paths, leveraging candidates' transferable skills and knowledge of the company’s products and markets. While external recruitment may seem simpler than supporting internal candidates with training, a skills-based organization prioritizes internal mobility in its HR strategy.
Balancing collective and individual management with agility. HR teams face the daily challenge of switching between individual and collective approaches. AI can assist in this area by enhancing tools like skill maps and frameworks, enabling real-time updates and predictive analyses.
To support this model, the corporate culture must foster the shift towards skills-based management by:
Focusing on the long term: Time for learning, behavioral changes, and integration. A skills-based organization is incompatible with short-term thinking.
Recognizing and valuing skills: Acknowledging acquired or developing skills motivates learning. Recognition can take many forms, from badges to mobility opportunities, with the key being to reward upskilling.
Creating a learning organization: A skills-based organization inherently fosters a culture of learning. But that’s a topic for another article—let’s not overuse jargon today!