The rise of skills-powered work transformation in high tech 

With a rapidly evolving tech landscape, companies are recognizing the need to adapt their talent management strategies to keep pace with the ever-changing demands of the market. In the past, a static set of leadership or “core” competencies would adequately account for the variety of skills required of an individual contributor or manager, but this is no longer the case. Traditional competency-based approaches, which focus on a fixed set of org-wide competencies or qualifications, are proving to be inadequate in an environment where innovation and agility are paramount. Instead, companies are shifting their focus towards a more dynamic and flexible model, centered around function-specific skill development.

Rapid advancements in technology and the emergence of new tools and methodologies means that employees are required to gain a diverse range of skills that can evolve in lockstep with technological innovation. Functional skills-powered talent management allows companies to build and engage a workforce that is adaptable, resilient, and capable of driving innovation and digital transformation. Companies that are successfully implementing these changes are able to identify vital skillsets within their workforce and pivot seamlessly to redeploy those skillsets based on functional needs.

By embracing a skills-powered approach, tech companies—and those in tech-adjacent industries—can tap into the full potential of their talent pool. Rather than being limited to predefined and generic competencies, employees are encouraged to continuously learn, upskill, and reskill to meet an organization’s evolving needs. This not only benefits companies in ensuring their teams’ skillsets remain relevant, but it empowers workers to own their professional development, fostering a culture of continuous improvement and growth.

In this article, we explore case studies of how three companies at various points in their life cycle have successfully integrated functional skills into job design, in order to transform their operating models, enhance internal mobility, or drive better leadership outcomes. We uncover the benefits of this approach, the value it delivers to the organization and its employees, and how it enables companies to close knowledge and skills gaps within their organizations.

Case Study 1:

A leading SaaS company embarking on a transformation to enhance their operating model
  • Context and challenge: 

    The company’s goal was to create a segmented service model that would enable sustainable growth and provide a tailored experience for its customers. The company leveraged skills-powered job design to redefine their function to drive customer-centric outcomes.

    Prior to undertaking the transformation, the company serviced all customers in the same way, regardless of size or complexity. As the organization and customer needs became more sophisticated, the company recognized the importance of segmenting the customer success organization. In order to successfully assign current employees to the new segmentation model, Mercer supported mapping employees into the go-forward organizational structure, by creating a foundation in newly-designed job profiles with relevant skills, as well as tools and a mapping methodology.

  • Solution and outcome: 
    The skill-powered job design and employee mapping process brought several benefits for both the company and its employees. The company was able to flexibly allocate resources to provide support at scale, ensuring consistency, efficacy, and tailored experiences for customers. Employees would now have clearly defined role descriptions and aligned skills, enabling them to understand role expectations and explore career path mobility. The mapping process ensured employees were allocated to segments that best suited their talents and skills, while also meeting business and regional needs. The process also highlighted the need for the company to upskill and reskill employees within this function, to ensure continued success in their go-forward roles. The transformation and related skill-based mapping positioned the company for sustainable growth and enhanced customer outcomes.

Case Study 2

A global cybersecurity company executing on an org-wide skills transition
  • Context and challenge:
    The company was growing rapidly through acquisition and consolidating businesses into a cohesive operating unit. They sought to create a technology-enabled skills framework to support career journeys within its organization. Mercer supported this engagement by leading working sessions with leaders of each job family and aligning on and defining a specific set of functional (job family-specific) skills. Through this process, functional leaders identified which skills were critical for their organization, how they aligned to the organization’s mission / vision / values, and how those skills correlated to market supply and demand. The company then rolled the functional skills out to their employees, to support career pathing through upskilling and reskilling, with the intention of creating an internal ecosystem for job mobility.
  • Solution and outcome: 
    The functional skills framework empowered employees at the company to create a “career adventure” by collecting critical skills, behaviors, and experiences, and aligning them to an internal career framework and marketplace, supporting internal mobility, enhanced employee engagement, and career clarity. The company benefited from retaining employees with both organizational context and skills critical for the company’s continued success, as well as increased operational efficiency, ensuring that the employees possessed necessary skills to execute their jobs and reducing training costs.

Case Study 3

A streaming company integrating people leadership skills
  • Context and challenge: 
    As a streaming company experienced exponential growth in recent years, fierce competition for eyeballs and for talent had led the company to hire rapidly. The company culture was collaborative and fast-paced, and there was a desire to increase focus on development and people leadership. In recent years, new leaders had entered the organization with a perspective on what defined a successful leader, bringing with them a set of leadership skills that had served them well at previous organizations (some in which the culture was vastly different). The company was struggling to align on a set of leadership skills across the organization, which would align with the company culture and values. Mercer supported the design of a set of leadership skills, determined by input from the business through focus groups and stakeholder interviews. Mercer then supported the implementation of the new skills within the organization by sharing how to embed them within HR processes like recruiting, training & development, and succession planning.  
  • Solution and outcome: 
    The company benefited from more clarity and alignment on expectations of leaders, as well as consistency in behaviors across functions for all those in a people leadership role. Focusing on people development reduced friction in decision-making within the organization, and supported strategic risk-taking, allowing leaders to spend their time focusing on critical elements of their role and increasing the velocity of strategic decision-making and follow-through by their teams.

As the tech industry evolves, the shift towards functional skill-powered talent management is becoming increasingly critical for organizations seeking to remain competitive. Though there are barriers to skills-powered models — implementation capability, aversion to change, and potential costs — these pale in comparison to the risk of ignoring skills.

Companies that fail to effectively incorporate and evaluate skills risk losing the competition for top talent. Specifically, we have recently encountered companies that have downsized a portion of their organization because they did not fully comprehend the transferrable nature of their employees’ skillsets, only to face difficulties in recruiting for those same skills shortly afterwards. By embracing functional skills, companies will become better equipped to navigate the challenges of the digital age in 2024 and beyond.

Below, we list four key steps for companies to consider as they embark on their skills-powered transformation journey:

  • Get real on the current state

    Understand the current state of the organization, alignment on the role of skills, and any historical context (i.e., have there been skills or competency frameworks rolled out in the past? How were they received? What were the challenges?). This provides a foundation for aligning on a philosophy for implementing functional skills.

  • Measure the gaps

    Based on the findings from the current state analysis, use quantitative and qualitative methods to measure the gap between current state and desired state. Gather insights through focus groups with SMEs, stakeholder interviews with functional leadership, workforce analytics, insights from the Mercer Skills-Edge Suite, and formal skill assessments via managers to understand which skills are integral for each function, as well as which may become more important in the coming years. Use this analysis to build upon the philosophy for skills and job design and prioritize the functions to focus on for a skills pilot.

  • Model the future

    Once you have defined the required skills by function considering the future needs of the organization and existing capabilities, align these skills to specific jobs within the organization. This step requires mapping functional skills to roles and developing skill proficiency levels to account for nuances in distinct positions and levels. A secondary step may be assessing the skills by role in a systematic way (i.e., a skills assessment pilot for a technical function, which can then be rolled out to the remaining functions).

  • Go live

    Deploy newly determined skill framework throughout the business, and embed them into HR processes like recruiting, rewards, performance management, learning & development, and succession planning. Integrating skills into these processes ensures they are utilized effectively, driving organizational success.
About the author(s)
Margarita Nachevnik
Tauseef Rahman
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