Have you heard of the term skills-based organisation? This relatively new term is gaining increasing popularity amongst companies and is at the forefront of several talent management strategies. This article explains in detail the benefits of a skills-based organisation and how companies have started implementing this strategy. 

What is a skills-based organisation? 

A skills-based organisation is a type of organisation that places human skills as a primary driver of company success. In a skills-based organisation, the focus is on identifying and developing individuals’ unique skills and talents to achieve the organisation’s objectives. This shift in talent strategy is leaving behind traditional business models and focusing on employee expertise and adaptability. 

This is a big step in talent management and will transform the employment landscape in various ways, as talent managers will have a broader vision when looking for new hires. They won’t just ‘tick off’ the degree box when searching for talent, but they will look at specific skills people have that can be useful for the role they are applying for. Consequently, companies can expand the number and standard of candidates applying for new roles through a skills-based focus. 

What are the characteristics of skills-based organisations? 

Implementing a skills-based approach is a big change. Shifting from traditional recruitment and employees to a new strategy can be a big challenge for organisations, especially HR managers. To help you in this process, we have outlined 3 main characteristics of skills-based organisations:

1. Skills-centric

The company should value and foster a culture that attaches great importance to individual skills and encourages employees to continuously develop and improve them. This strategy should be embedded in recruitment processes, including job specifications, interviews, and onboarding processes, leading to a wider talent pool.

2. Training opportunities

The employment landscape is constantly evolving, therefore it is important for employees to keep ‘updating’ their skills, whether this is through upskilling or reskilling. As technology also advances, companies should provide training on new software and AI, which can benefits employees in a number of tasks as well as helping them adapt to these advances. Allocating a training budget is key if companies want to boost their employees’ skills.

3. Feedback

Feedback also plays a key role in a skills-based approach. HR managers and line managers should have a clear understanding of employees key skills and how they can be used, this can be done through performance reviews. Employees should receive constructive insights on their strengths and areas for improvement, facilitating targeted skill development initiatives.

Moreover, outlining a career and learning path can be helpful for employees as it provides a clear roadmap for professional development. Employees gain clarity on the skills required to progress in their roles or explore new opportunities within the company. 

What are the benefits of a skills-based organisation?

Having a skills-based organisation helps companies excel in a number of different areas, from talent management to organisational success. We’ve outlined 5 key benefits of adopting a skills-based approach. 

1. Wider talent pool

Skills-based organisations attract a wider talent pool as they are not searching for ‘traditional’ candidates with an extensive CV and a degree o master’s. In addition, a skills-based organisation is better equipped to identify job-specific skills needed during recruitment. In fact, studies show that skills-based organizations are 107% more likely to place talent effectively and 98% more likely to retain high performers. This results in a more accurate selection of candidates and a better match between job requirements and individual skills.

2. Increased productivity

Employees are more likely to excel in roles that align with their strengths, resulting in improved efficiency. Moreover, employees in a skills-based organisation are more engaged because they are actively involved in developing and utilising their skills. This engagement can lead to higher job satisfaction, increased motivation, and a stronger sense of purpose among the workforce.

3. Cost efficiency

By matching tasks to the competencies of existing employees, organisations can streamline the allocation of resources and reduce the need for external recruitment. This can result in cost savings related to recruitment, onboarding, and training.

4. Improved mental well-being

Implementing a skills-based approach can help boost employees’ mental well-being. Firstly, when employees are equipped with the skills necessary to perform their jobs effectively, they are more likely to experience job satisfaction. This also increases motivation and self-esteem, leading to better mental health. 

In addition, In skills-based organisations, continuous learning is often encouraged to keep employees updated with the latest industry trends and technologies. Learning and development opportunities can be rewarding and contribute to a sense of personal and professional growth, positively influencing mental well-being.

Supporting mental well-being in organisations

At ifeel, we know that a skills-based approach is a key driver in organisational succes. Moreover, it also has a positive effect on employees’ mental well-being. Applying this apporach is a big step for HR managers and leaders, but if it’s done right, it can create a productive, motivated and engaged workforce.

To support companies in this process, our team of expert workplace well-being psychologists has created a mental well-being solution for businesses that improves talent retention, reduces presenteeism, and combats employee stress. 

With our mental well-being solution, your company’s HR managers can receive personalised, data-driven advice on improving mental health at work. In addition, this solution offers employees a 360° mental well-being service structured at different levels according to their needs. Try our solution now to see how it could help you.

We hope you found this article about skills-based organisations interesting. If you would like more information about our mental well-being solution for companies, simply request it, and we will contact your team as soon as possible.