First thing first: What do we mean by skills-based organisations…

Skills-based organisations focus on leveraging employees’ skills to meet company goals, rather than emphasising and maintaining people in the limitating boxes of an organigramme. As a result, this approach allows for a more dynamic and adaptable workforce, promoting continuous learning and development, encouraging individual growth, and better adapting to changing industry demands.

…And why does it happen now?

The PwC CEO survey of 2023 emphasizes the need to retain the right talents and skills. This global sentiment is further supported by the World Economic Forum and PwC joint study, i.e. Putting Skills First, s that by 2030 around 80 million jobs could remain unfilled worldwide due to skills mismatches.

Skills-based organisations are an answer to at least two key evolutions:

• Firstly, the rapid pace of technological advancements means that skills become obsolete quickly, especially in fields like technology or climate for example. A degree earned 20 years ago may no longer be relevant today, necessitating continuous upskilling and reskilling to keep up with the market needs.
• Secondly, Generation Z, in particular, values skill development and employability. They seek not only vertical career progression but also opportunities to explore different roles related to their expertise.

But, concretely, what does it mean for organisations, employees, and managers?

For organisations, the transition to a skills-based approach boils down to fundamental changes in how talent management is designed, executed, and processed: it is an intertwined cultural change with impact on the underlying HR processes and supported by a new technology (or vice versa).

Organisations should actively encourage this new mindset where, instead of focusing solely on formal qualifications and core business skills, managers begin identifying and nurturing the diverse skills and capabilities of their team members. This shift requires managers to be more aware and responsible of their team members’ individual capabilities and how to leverage them in the best way for the objectives of the organisation.

This means that organisations should contemplate incorporating new tools and improved talent processes to help them better track, assess and consolidate those skillset data. At the same time, organisations should also ensure that all their employees understand (and concretely experience themselves) that vertical promotion is no longer the sole career path as horizontal (or diagonal) movements can also provide valuable experience and represent a potential career trajectory.

So how do we ensure that organisations reap the benefits of such a transformation?

Our main recommendations would be for organisations to:

• Make it visible: Encourage a continuous inventory and update of the various skills – acquired or developing- in each individual profile to have the most accurate and complete vision of your employees’ capabilities.
• Make it global: Involve all departments and leadership levels from the start. You could start by creating cross-functional teams to lead the transformation, ensuring that every department has a voice in the process.
• Make it together: Encourage open communication and create opportunities for employees to work together on projects that leverage their diverse skills. This will demonstrate “quick wins” and help break down silos to foster a sense of unity and shared purpose.
• Make it a journey: Recognise that the transformation to a skills-based organisation is an ongoing process that requires time and patience. Think about how to provide ad hoc support and resources for employees and managers to adapt to those new tools and processes and encourage a culture of continuous learning and improvement.

Start from where you are and build it step by step. This should be an exciting journey! Who knows, with a bit of upskilling, the data analysts from yesterday might well become the financial controllers of tomorrow thanks to their skillset proximity.

Feel free to reach out, we are always eager to exchange on your reality and get you started on this challenging adventure!

Authors:

Alessandro Acconcia, Senior Manager Cultural Change at PwC Luxembourg & Mariann Rackebrandt, Director HR Excellence at PwC Luxembourg