The Skills of Tomorrow: Your Questions Answered!

Skills are all the rage right now, and everyone is talking about them being a non-negotiable when it comes to hiring and retaining talent for the future. 

But people have questions: What are the challenges of adopting a skills-based hiring approach? How do you evaluate skills among existing employees? What’s the secret to securing buy-in? 

Phenom’s John Deal, Sr. Director of Product Marketing, joined us on Talent Experience Live to answer these and other questions. He also shared insights from the recently released State of Skills: 2024 Market Data Report.

Read on for show highlights, or watch the full episode below.

Can you give us some background on the State of Skills report?

To equip you with the information you need to make informed decisions and investments in skills development, we created the State of Skills Report. This report draws on datasets from Phenom’s skill and role ontologies, which contain 12 years’ worth of data (and growing). The report frames its findings against data from the Department of Labor and other sources for a well-rounded take, according to Deal, who served as a primary author. 

The State of Skills report identifies emerging and declining skills, how current roles are evolving, and identifies today’s popular job roles to help TA professionals understand how to plan for future hiring needs and employee development activities.

“If [HR leaders] see that certain skills are declining and they have a lot of those in the organization, then they need to start thinking about what they’re going to do with those employees — specifically where they could potentially move them to satisfy the needs that are emerging. Also, what are the roles you can take and evolve very easily to meet those emerging needs so you can get there faster?” Deal said.

Beyond learning and development, the report dives into how employers apply a skills-based approach to hiring, performance management, and other applications within the talent lifecycle, he added.

How does a skills approach dovetail with performance management?

“One is feeding the other, and we still want to promote a robust performance management process,” Deal said. “But by using skills data, you can have more meaningful conversations with members of your team.”

For example, a manager incorporating skills into a sales development rep’s performance review would look not only at metrics like the number of deals closed but also would consider how the employee has developed their skills in cold calling and other job activities that can add value across the organization.    

“Skills is just the starting point; it’s not the endpoint. We’re not talking about overhauling your entire practice of performance management. We’re saying use this to have better conversations about performance.”

How do you track and quantify skills growth internally?

Using skills to grow and develop your employees can help foster retention, productivity, engagement, and agility. But what’s the best way to keep track of new skills among the internal workforce?

While it’s fine to make hypotheses about skills gained based on an employee’s length of tenure in a position, the optimal approach is to combine those assumptions with AI tools that can capture new skills being amassed through training courses or on-the-job experience. 

“It’s all about taking those tools, getting within the flow of work, and pulling that information into a system that can analyze it to reveal new skills,” Deal said. 

Are companies embracing skills-based hiring?

In a recentForbes article that debates the merits of skills-based hiring, the author notes that few organizations have fully adopted the approach. But implementing skills-based hiring is not an overnight process, which doesn’t resonate well in an era of instant gratification.  

Instead, moving to skills-based hiring requires a culture shift — and time. 

“I think we’re still in that early adopter phase,” Deal said. “But we’re starting to see people move from theory to practice, and as more people move into that practical stage, then the dominoes start to fall.”

Case Study: The ROI on This Fortune 500 Company’s Skills-Forward, Employee-First Business Model

What are some best practices for evaluating skills?

“Using multiple data points is where we’ve seen success with our clients who are using skills-based hiring,” Deal said. Those include:

• Assessments

• Self-rating

• Endorsements from others (e.g., from managers or peers)

• Data gleaned by AI tools from the flow of work 

How can you secure employee buy-in on using an internal system to update skills?

A skills-based approach becomes much more tenable with the right technology to track and analyze employee skills. And the success of that technology depends on employees’ willingness to not only keep their profile current but to take advantage of things like mentorships and training courses. 

How can employers encourage buy-in for the time and effort this requires?

“You have to make it very outcome-driven. People need to understand why they’re giving this information,” Deal said. Emphasize that putting in the effort to gain and keep track of skills can help them get that new position they’re interested in or the promotion they have their sights set on.  

Another benefit to communicate? Thinking about skills in an ongoing way can help employees better gauge their achievements when it’s time for their annual performance review. “Skills are so granular, it gives you more building blocks to work with,” Deal said. 

Is it better to start internally or externally with a skills-based approach?

Both external and internal skills roll-outs have their unique challenges — but starting with the TA group for external skills-based hiring might be the optimal approach. “It is a little easier to roll out to talent acquisition because it’s a smaller group of people,” Deal said, although it does require a mindset shift for practitioners who are used to honing in on job titles and university degrees.  

His tip for success when it’s time for the internal rollout? Find small pockets within the company to pilot the new skills approach, and identify champions to generate enthusiasm and buy-in. “That’s where the big change management piece comes in because now you’re talking about the entire organization,” Deal said. 

Get inspiration from Merck KGaA’s skills success story

Is a skills-based approach a good fit for companies with short employee tenure? 

If employees don’t last long enough to develop their careers internally, does it make sense to focus on skills?

First, consider whether a self-fulfilling prophecy may be in play, Deal pointed out: Are employees leaving because of a lack of opportunity? “What we’ve seen in the State of Skills Report is that the more comprehensive of a development program you have, and the more conversations you have about careers, the more likely people are to stay longer.”

Of course, some industries (e.g., Retail, Hospitality) have naturally high turnover. Workers can still benefit from continuous on-the-job learning that improves performance and builds job skills — and so can employers in the form of stronger culture, increased attraction, and boomerang employees.

Get more on skills! Download your copy ofState of Skills: 2024 Market Data Report today.