Today, skills-based training is more important than ever.
There’s a lot of buzz about organizations pivoting to a skills-based hiring approach, and the very low, post-pandemic unemployment rate has a lot to do with it. According to Harvard Business Review, when the demand for talent far exceeds supply, employers de-emphasize degrees when filling open positions.
But skills-based learning pathways are on the rise, as well. Research conducted by the Conference Board confirms that the traditional job-based approach to talent development is too rigid, particularly in industries where skills requirements are evolving rapidly and unpredictably.
By 2025, 50% of all workers will need reskilling.
By 2025, 50% of all workers will need reskilling to keep up with technological advances, according to the World Economic Forum. In fact, 87% of executives surveyed by McKinsey said they’re already facing a skills gap and recent college graduates often lack sufficient competency in key skills.
To build a workforce that can keep up with the pace of change, organizations that haven’t already can benefit greatly from exploring skills-based training.
The benefits of skills-based training
A recent McKinsey article highlighting the benefits of a skill-based training approach emphasized its ability to create a “more strategically aligned workforce, with measurable improvements in skill areas that directly address organizational objectives.”
It also helps organizations retain talent by supporting internal skills-based job progressions for workers, countering the tendency for them to advance to a more rewarding role by changing employers. A 2018 SHRM article revealed that the top reason employees voluntarily leave their jobs is a lack of career development opportunities. However, many organizations don’t have a mechanism in place for workers to advance.
With skills-based training, employers can determine which skills are needed for each role in the organization, where employees currently stand with regard to those skills, and how to equip them with the skills needed to move into their next role.
Organizations that build human capital by emphasizing skills development realize financial benefits, such as savings from lower turnover. Learning and development spend is optimized by providing the right training to the right people at the right time. And organizations that employ skills-based training experience more consistent earnings in addition to greater resilience during times of crisis.
How does skills-based training benefit workers? Initially, it sets new hires up for success in their roles. Though new hires may join an organization with strong foundational skills, they’ll need skills-based training to acquire organization-specific knowledge.
McKinsey suggests that it takes up to 12 months of “thoughtfully curated onboarding and coaching” for new employees to hone the skills needed to thrive in their roles. This process can involve skills-based training programs developed internally or acquired from a provider, as well as on-the-job training. The goal is to meet new hires where they are and provide a learning pathway built with them in mind.
Skills-based training also has financial benefits for employees. For the average person, skills learned on the job account for 46% of their lifetime earnings. And people working for companies that support internal advancement with skills-based training are likely to move into higher income brackets over the course of their career.
Additionally, workers feel empowered by employers that offer skills-based training. Their competence grows and they’re able to work more independently, which increases their confidence and job satisfaction.
Developing a skills-based training program requires a deep dive into current and future needs, including a skills gap analysis. Large-scale implementation requires a common language and framework of skills — a taxonomy of all the skills required for an organization to accomplish its business objectives.
AIHR defines a skills taxonomy as, “a structured list of skills defined at the organization level that identifies the capabilities of a business in a quantifiable way.” (This is not to be confused with a skills inventory, which lists the aggregate skills, experiences, and other professional qualifications of an organization’s employees).
Mapping current against an organization’s skills taxonomy reveals the gaps that need to be bridged through skills-based training.