Leading from the front in the skills revolution 

5 steps organisations should take when setting up a skills-based talent strategy

Traditionally, work was a place we’d go to, but now it has become more about what we do — from anywhere. It’s all part of a new talent equation of supply and demand based on skills being critical for success.

In the future, jobs will no longer be the corporate unit that everything is organised around. Instead, tasks will be divided between humans and machines, depending on who best suits each task.

We’re already seeing significant shifts in how we put skills to work. The first is a shift in how jobs are defined — from roles within traditional organisational hierarchies to a more dynamic model, where skilled individuals work across multiple project-based settings.

The next is a shift in work between humans and machines, as technology evolves to take over the more transactional tasks, and humans focus their skills on more unique and strategic aspects. This shift becomes less about humans using technology and more about how they interact with it instead. Simply put, technical skills become the “means to compete,” while human interpersonal skills become the “competitive advantage.”

These shifts will lead us to reshape how employees grow, navigate their careers and get paid. When done right, skills can drive organisational agility and unlock the power of people. Skills-based approaches are one way that companies are reinventing flexibility, from pay to skill to skills-based talent matching. This flexibility is pivotal to delivering the productivity and efficiency required by modern businesses, but there’s still some way to go.

Approximately half (47%) of companies report that they are yet to develop an approach to classifying skills at any level of their company, which is a minimal change since 2021.
Mercer 2022 Pay for Skills survey
In Mercer’s 2022 Pay for Skills survey, we explored the challenges of attracting, retaining and rewarding talent based on desired skills across more than 650 organisations worldwide. Nearly half (47%) of the companies surveyed still needed to develop an approach for classifying skills. Of the companies that did, they had yet to reach a consensus on an optimum number of proficiency levels, and subjective processes were still the most common way to assess skills. The principal purposes for using skills-based pay included revamping critical technical skill sets (52% or organisations surveyed) and an implicit need linked to strategic goals (42%)

The skills revolution is now

A shift to a skills-based talent strategy requires support across multiple sectors, from higher education to government and even between industries in the private sector around skills development. It also needs strong support from within a company, across senior leadership, finance and HR teams.

Below are five steps for companies to take when switching to a skills-based talent strategy.

We see organisations all along the maturity curve for skills. Some are just starting by building a learning catalogue, while the more mature organisations have thought about skills connected to careers and rewards and are creating the infrastructure for it. Ultimately, having a skills-based talent strategy will mean that your company is well-equipped to find people with the right skills for the business to succeed.

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