Here's how to implement a skills-first approach to workforce development

The American workforce is on the cusp of massive disruption, with 40 percent of employees actively looking to change jobs in what economists are calling “The Great Resignation.” This presents business leaders with two unique dilemmas: first, how to manage churn within their own organizations; and second, how to effectively hire new talent, while developing their existing workforce.

The traditional methods of matching people to work are not up to the task. Many hiring practices are outdated and inefficient, with layers of bureaucracy, lots of administration, and old assumptions about who is qualified to take on what challenges. At the same time, legacy workforce development efforts are not equipped to meet the new level of need. As a result, businesses are missing out on potential talent, and people are missing out on jobs or experiences that would make a powerful difference in their lives.

By the end of 2020, 80 percent of U.S. employers had difficulty filling openings because of current skills gaps. The World Economic Forum estimates that 42 percent of jobs will require different skills in the next three years, and over 1 billion workers will need reskilling by 2030. Replacing talent – or preventing its loss – is the number one challenge many organizations are facing in the near term. Underlying that challenge is a bigger problem: the lack of an adaptable, engaged workforce with the skills needed for a changing world. This presents a serious risk to the whole population in a rapidly changing, complex world.

For both businesses and workers, agility – the ability to adapt and respond quickly to whatever comes next – is essential. Skills-first strategy is a promising, emerging trend aimed at increasing agility. A skills-first approach requires rethinking the premise of talent and turning the traditional talent model on its head. Demonstrated skills are valued over job histories and degrees. Rich, varied career journeys are prioritized over unilateral, pre-defined paths. And rewards and recognition are influenced by skills and contributions, not just job level, tenure or location.

There is no quick and easy way to make the move to a skills-first strategy. But, once you take a skills-first perspective, the implications are far reaching, touching everything from recruiting and development to learning and rewards. As the Chief Learning Officer at Workday, I’m finding myself “unlearning” many of my assumptions. But I'm also inspired by this new approach, which opens up new avenues for solving today’s business challenges.

Whether you’re a company leader or in an organizational talent role, here’s how you can get started with a skills-first talent strategy:

1. Establish a unified skills language

Most organizations use confused and inconsistent terminology around skills. This makes it difficult for employers to identify which workers have the skills needed to fill open roles, and workers struggle to understand which skills they should develop to advance their careers. We suggest simplifying and streamlining so that everyone is on the same page. For example, at Workday, we are moving to a three-part shared language around skills: Core Skills, Job Skills, and Unique Skills. In other words: What is needed to be successful at this company? What is needed to do this job? What else does an employee (or potential employee, contractor, or freelancer) have to offer?

2. Consider your company culture

What aspects or attributes of your company culture support the shift to skills first? What might get in the way? What is required to operate with a skills-first strategy across the enterprise? You will need to build on structures and behaviors that foster connections across silos, candid communication and conversation, and psychological safety. These will help you to empower workers as you determine which skills are needed to accomplish business strategy and goals, identify who has those skills, and fill in gaps by moving, developing, or bringing in new people.

3. Leverage innovative technology

With products that are seamlessly connected, technology can drive key business outcomes: getting work done, reskilling and upskilling, driving performance, and creating opportunities for career growth. For example, Workday can match an employee’s skills to the skills required for an internal job or gig available in Workday Talent Marketplace. We can also make personalized skill learning recommendations in Career Hub, a centralized space where employees can use tools and resources to develop in their careers.

Skills are the fundamental currency of the changing world as we prepare for the future of work. A skills-first approach opens the door to exciting, dynamic careers for current and future employees, which further promotes ongoing learning and engagement – just what organizations need to ensure they attract and keep the right talent.