Skills Taxonomy: How Firms Are Leveraging Skills In A Changing Workforce

Skills Taxonomy: How Firms Are Leveraging Skills In A Changing Workforce

A surge in remote work during the pandemic has accelerated an already rapid shift toward digitization. In this changing environment, organizations are facing a constant demand for new skills — the World Economic Forum forecasted that 42% of core job skills would change by 2022. While firms are needing to upskill, they are simultaneously struggling to fill positions and retain associates in a candidate-driven market.

This evolving landscape isn’t slowing down. But the good news is that an innovative talent strategy can help firms upscale their capabilities and boost employee retention at the same time. A skills-based approach to talent management supports firms as they expand their skills while helping them attract emerging talent who are looking to grow their careers. A skills taxonomy is the framework behind this forward-thinking approach.

What is skills taxonomy?

A skills taxonomy is a database of relevant skills within an organization. More than that, it’s a system that defines, measures, and organizes skills into a hierarchy.

For example, like a tree diagram, an engineering firm categorizes skills into a hierarchy with broader skills at the top (e.g., design skills), branching off into more specific skills (e.g., CAD skills) at the bottom. Skills taxonomy is a basic concept, but it’s an ontology that can be channeled throughout an entire organization.

A skills taxonomy supports firms in assessing their current capabilities, recognizing skill gaps, and streamlining their HR decision-making. The focus shifts from generic roles to granular skills, allowing firms to proactively match skills to work.

Why are firms embracing skills in addition to roles?

Skills are helping firms define and understand evolving job roles. In contrast to static job titles, a skills-based approach is fluid and dynamic, allowing firms to plan for the future during times of change. Unsurprisingly, leading organizations from Amazon to JP Morgan are investing hundreds of millions in skill development.

Skills tracking gives organizations a clear picture of their staff’s capabilities. Firms can then maximize talent potential by inviting team members to move between roles and pick up critical skills. Skills-based thinking lends organizations a sharper understanding of where they are and where they are headed, so they can outpace competitors by adapting swiftly to industry changes.

What are the benefits of a skills taxonomy?

A skills taxonomy offers managers a strategy for building a stronger team, staying in control of talent management, and cultivating a competitive advantage. Here’s how.

Allocate resources equitably and effectively

Skills tracking facilitates effective resource allocation. When overseeing a large talent pool, narrowing down the right team member for each project is a re-occurring challenge. A skills database eliminates guesswork by providing managers with a clear view of each associate’s unique skill set, allowing leaders to match these skills to the requirements of open assignments.

This approach empowers managers to easily identify competent staff members for each project, so they can assemble teams that will deliver the best possible services to clients. Leaders can create well-balanced teams with corresponding skill sets, ensuring that all aspects of a project are covered.

A skills-based approach further promotes the equitable allocation of work. Skills tracking offers leaders an objective measure of each associate’s ability to perform and encourages managers to assign and reward employees for their capabilities over their tenure, power, or connections. When managers assign projects based on skill sets, every team member has an equal opportunity to take on meaningful work.

Foster talent development and mobility

A huge advantage to a skills taxonomy is that it illuminates opportunities to strengthen the talent team. Skills tracking helps identify team members who will benefit from mentorship opportunities. For example, an associate with extensive trial experience but minimal cross-examination skills can be assigned alongside a mentor who has already mastered this skill. Upskilling on a regular basis as services and products evolve helps create a team that’s always ahead of the curve.

A skills-based approach can also help employees map out their career paths. Associates can be encouraged to visualize the skills they’d like to develop and to identify certifications, courses, and projects that will help them get there. Armed with a solid roadmap, they can then track their progression as they work toward the skills they need to meet their personal career goals.

A focus on skills further supports talent mobility. When roles are put aside, associates can move across projects as their skill sets allow, regardless of their job titles. This helps all staff members grow and establishes a more diverse and interconnected team. Managers can elevate their greatest assets — their talent — by employing them in strategic and thoughtful ways. Rather than stale or stagnant, the workforce becomes active and ever-improving.

Improve retention with a better employee experience

Retention is a major challenge in the current workforce. In 2021, record numbers of US workers left their jobs, in a trend dubbed the Great Resignation. The professional services industry is no exception to this increased turnover. For example, the legal industry is facing an ongoing talent war, and the number of US associates moving between law firms jumped by 51% in 2021.

The key to retention may lie in the employee experience.  Workers are feeling overwhelmed and burnout has continued to rise across various industries since COVID-19. For example Architects are feeling overworked, and a 2021 survey by Bloomberg Law suggests that the number one challenge facing law firms is employee well-being. A skills taxonomy supports a better employee experience in numerous ways.

When managers cater to team members’ unique skill sets, associates feel recognized, appreciated, and vital to the team. Skills tracking matches staff to the most suitable and enriching projects, driving higher engagement and motivation. By aligning assignments to associates’ capabilities, employees aren’t being stretched too thin by ill-suited projects.

Skills tracking opens up opportunities for career growth by offering associates flexibility and agency in their assignments. According to a 2020 study by the NALP Foundation, one of the top reasons entry-level associates leave law firms is the ‘pursuit of specific practice interests.’ When your people have more room to grow, they stick around instead of looking elsewhere to boost their careers.

Hire smarter and more efficiently with skills tracking

In an employee-driven market, 73% of North American companies are struggling with hiring. Skills tracking helps managers optimize the recruitment process by identifying critical skill gaps in the workforce. Managers can then hone in on candidates who are the best possible match for their team based on their skill sets and future potential.

Rather than recruiting based on previous job history, a skills-based approach to hiring focuses on applicants who can contribute valuable skills. This helps firms recognize candidates who will bring the most to the team and best integrate with the current skills of their workforce.

Skills tracking also highlights opportunities to promote within the company rather than recruiting outsiders. By shifting the focus away from roles, managers can more easily spot skills that already exist within their team or that can be trained among current staff.

Build a competitive advantage by maximizing talent potential

A stronger talent team means more competitive services for clients. Firms recognize that their talent is their capital, and a skills taxonomy helps them assess, understand, and best utilize their talent. Staff are empowered to learn and flourish within the company, creating an ever-progressing talent pool that plays to each associate’s strengths while connecting skills in ways that lift the entire team.

Skills tracking acknowledges associate skills that fall outside their roles. With no skills left behind, leaders can harness the diversity of their talent pool. Staff are encouraged to think beyond their job titles, encouraging innovation and productivity.

In short, a skills taxonomy helps leaders stay ahead of the game by preparing for the skills of the future. This approach stimulates growth not only among staff but across the entire firm, helping organizations provide dramatically better services to their clients.

How can firms move toward building a skills taxonomy?

1. Assemble a team to own the skills taxonomy

Developing a skills taxonomy is an ongoing project. It’s a company-wide endeavor that requires focused effort and long-term thinking. Leaders can designate a specific team to oversee the skills taxonomy and ensure that each department is represented. This will help align departments and ensure the taxonomy is being understood and implemented the same way across the board.

2. Get to know the vendors, technology, and data

Skills aren’t a new concept in the workforce. In today’s digital age, firms have an abundance of skill data at their disposal, for both existing and prospective talent. To help process and analyze this data, innovative HR tech solutions are being made available.

The skills team should familiarize themselves with the available software and vendors to pinpoint which ones are right for the organization. These learning data and software solutions are designed to speed up administrative tasks and streamline operations while helping firms assess, manage, and upgrade the skills of their workforce.

3. Start building a skill library

A skill library is an inventory of all the skills within an organization, and building this library is a key starting point. The skill library should be organized into categories that are valuable and understood within the company, and then named and given descriptions. As firms acquire new staff and juggle new job titles, the skill library will need updating.

To begin creating this massive list of skills, a firm can look within their organization, sifting through job descriptions, employee assessments, and speaking with department heads. Vendors can also help firms build a skill library that is tailored to their organization, with technologies to streamline the process.

4. Incorporate a skills-based approach within all HR practices

The skills taxonomy forms the framework behind all company decision-making. Over time, the taxonomy can be incorporated into all HR practices — learning and development, hiring, the allocation of work, performance evaluations, and even compensation.

By focusing on one area at a time, firms can gradually integrate a skills-based approach throughout different departments. With the help of HR technology, leaders can organize, analyze, and harness their skill data throughout all their operations.

The Takeaway

The workforce is shifting from roles to skills, and leading firms are taking note. A skills taxonomy can help leaders allocate work effectively and equitably as they scale up their talent, improve retention, hire smarter and more efficiently, and create a competitive advantage.

Building a skills taxonomy is a significant undertaking. While it can seem overwhelming, an effective skills taxonomy will become one of a firm’s most valuable assets. By leveraging up-and-coming HR software, organizations can gradually upskill their teams, better organize their infrastructure, and, ultimately, offer first-rate services to their clients.