What is a skills-based organization?

It’s a simple premise with a huge impact.

Get rid of traditional qualifications like job titles, CVs, roles, and diplomas…

…and start hiring and assigning work based on competencies, skills, and potential for growth.

Essentially, skills-based organizations dismantle our traditional conception of the ‘job’ with a framework for work that centers more around the real capabilities of the employee. Individuals are assigned work based on their talents and competencies, rather than be limited to tasks defined by an existing role. Supervisors assign work from a pool of qualified employees and make their decisions based on real-time data from a skills hub or skills-matrix. 

Of course, companies aren’t expected to move away from jobs and roles entirely. But by prioritizing skills in operations, HR and hiring, and training initiatives, manufacturers can improve results while dramatically boosting  frontline engagement.

Why the shift to skills-based?

The manufacturing industry is feeling the pressure of a global skills crisis. It's clear that companies will need to innovate in order to keep their frontline engaged and prevent turnover.

• By 2030, 80 million jobs worldwide will not be filled due to a skills shortage.
  
  
• 73% of workers say that skills-based practices would improve their experience at work.
  
  
• 66% of workers say they’d be more likely to stay in a skills-based organization.

The move away from a job-based organization sounds like a radical transition, but the potential impact is staggering. 

Detailed research from companies like Deloitte is revealing the numbers around skills-based work and its transformative potential:

• Organizational agility
• Growth
• Innovation
• Diversity
• Equity

These transformations are becoming increasingly popular, with companies like Unilever opting to phase in a skills-based approach across much of its operations with positive results.

What’s more, executives around the world are acknowledging that a critical transformation needs to take place - but many lack the resources or tools to accomplish this effectively.

“77% of business executives agree their organization should help their workers become more employable with relevant skills, but only 5% strongly agree they are investing enough in helping people learn new skills to keep up with the changing world of work.” 

This is a sentiment echoed across many areas of frontline work - a dramatic need for improvement without the urgency to improve resources available at the frontline. However, these transformations are beyond important. They can be absolutely critical for success in a turbulent economy and a growing labor crisis.

Let’s examine the potential impact and benefits of skills-based organizations in manufacturing.

1. More agility and responsiveness at the frontline.

“Skills-based organizations are 57% more likely to anticipate change and respond efficiently and effectively.” 

A skills-based approach will improve how quickly your frontline teams can react to changes in their daily work. Employees trained in multiple skillsets can flex as needed to several roles within a production environment.

Cross-training and upskilling initiatives are already essential to a competent and flexible frontline, even within a traditional role-centered structure. These employees are able to work within multiple roles with greater confidence, efficacy, and autonomy. 

A skills-based approach elaborates on this concept and allows employees to be redeployed across tasks based on their skillsets. Manufacturers can respond more quickly to production needs, seasonal demand, and emergencies.

2. Greater productivity and efficiency.

“Skills based-organizations are 49% more likely to improve processes to maximize efficiency.” 

Placing a priority on skills and competencies means…more skilled and competent employees. 

Skills-based organizations have a greater opportunity to place highly skilled employees more effectively because individual employees are more flexible in their daily work. Rather than be constrained to one function, an employee can move to any task that falls within their competency. 

In the days before digital skills management tools, this might have proven a daunting task. Tracking the individual skills of employees and matching them to the appropriate task - and doing so efficiently - is exceedingly difficult with paper and Excel-based tools. 

However, skills management platforms with tools like skills hubs, individual employee skills portfolios, and skills matrices mean that today’s shop floor managers have an instant and accurate idea of who can do exactly what. 

This visibility,  coupled with more successful competency-based training methodologies, means that teams are more effective, efficient, and flexible across your operations. 

“Skills-based organizations are 107% more likely to place talent effectively.”

3. Improved employee retention, buy-in, and satisfaction.

“Skills-based organizations are 98% more likely to retain high-performers.” 

The most tangible benefit of skills-based organizations is that they help create a better work experience for the employees. 

Manufacturers are able to increase feelings of engagement, transparency, and autonomy within the workforce, as individuals are “freed from being defined by their jobs and instead be seen as whole individuals with skills and capabilities.” [Deloitte]

Frontline employees are encouraged to grow and develop according to their talents (and weaknesses), rather than fill a predetermined set of expectations and competencies. When a skills-based approach is combined with digital skills management solutions, employees can engage with their own employee development journey visually and proactively via tools like skills portfolios and learning journeys.

💡 Programs like skills-based pay are much more easily implemented in a skills-based organization, allowing manufacturers to further incentivize growth and competency development.

A workforce that feels like they have control over their future is one that is engaged and less likely to leave - a critical factor in an industry experiencing unprecedented turnover rates.

“Skills-based organizations are 98% more likely to have a reputation for being a great place to work.”

4. Streamlined and more effective training.

“Competency-based training has a positive correlation on 5S and TQM, and is instrumental in improving the level of 5S.” - International Journal of Quality & Reliability Management

A skills-based organizational model allows manufacturers to implement competency-based (often called skills-based) training programs, where employees are trained according to the specific skills required for operational tasks. 

Traditional training methods train employees based on a job description and limit training initiatives to a particular set of skills bound by a role. Within this model, it’s difficult for employees to grow their skillsets according to the specific needs of their work environment. Instead, they follow a pre-determined training path that’s often executed with formal classroom training techniques. (Find out why these are less effective.)

In a skills-based organization, frontline teams are trained on the discrete skills and tasks present within their production environment. This approach means that employees receive training tailored to their specific job requirements. 

Competency-based training is:

• More focused: More training on skills they need, less on skills they don’t.
  
  
• More effective: Training can be delivered on-the-job (proven to lead to greater comprehension and retention) and with a higher success rate.
  
  
• More relevant: Employees learn the skills to do their jobs well.
  
  
• More transparent: Coupled with a skills management platform, supervisors can immediately see skills gaps and areas for improvement and upskilling.
  
  
• More flexible: When teams can individually perform all of the tasks within a production environment, they can more easily flex to cover a line or shift.

“85% of surveyed employers prefer to hire candidates that received competency-based training.” - Source

All quotes, facts, figures, and charts are originally sourced from Deloitte unless otherwise noted.

Want more skills content?

👉 Here's how to train based on competency, not job titles.

👉 Here's a great free template to help coordinate employee development.

👉 Here's a breakdown of reskilling vs. upskilling (and the importance of each) at the frontline.