3 Steps to Building a Skills-Based Organization

Have you ever tried assembling a puzzle without knowing that some pieces were missing? That’s the challenge your business faces when you lack clarity about employee skills. 

And you’re not facing this problem alone. According to our 2024 Skills Fitness Report, 69% of companies rely on performance conversations to collect and catalog skills data — yet less than half conduct performance reviews more than twice a year. That infrequent data collection can create costly inefficiencies in hiring, mobility, and workforce planning.

For HR leaders, the solution lies in adopting a skills-based approach that enables better decision-making, boosts employee engagement, and promotes organizational agility. That’s why we invited Ben Eubanks, chief research officer at Lighthouse Research & Advisory, and David Landman, talent strategist and former global head of talent development at Goldman Sachs, to share their insights on the topic at our recent webinar, “Skills Fitness: Expert Insights in Building a Skills-Based Organization.”

Here are three actionable steps from the conversation to help you build a skills-based organization.

Align leaders on the business value of skills

Skills-based strategies work best when they’re tied to tangible business outcomes. Without executive buy-in, even the most well-designed HR programs risk falling flat. For HR leaders, the key is connecting skills initiatives to the priorities that matter most to the C-suite, such as revenue growth, risk management, and operational efficiency.

A key step in communicating the value of skills to business leaders is overcoming existing barriers. HR teams need to act as the Rosetta Stone for their organizations, Ben says, and recognize that leaders may frame skills challenges in different ways, without realizing that they’re talking about skills. 

“They may be talking about this right now in terms of, ‘We are not competitive enough,’ or ‘We’re worried about risk right now, and stability to the business,’” he says. By framing skills gaps in terms of business risks and opportunities, you can secure the support you need to drive change.

David highlights another critical success factor: co-ownership. He recalls facilitating the process at Goldman Sachs, but not owning it. “Ultimately, it was led, or co-led, by the business,” he says. “And that, to me, is the secret sauce of getting things done — and getting them done right.” By partnering with business leaders, you can foster a sense of shared ownership, ensuring that skills strategies are integrated into broader organizational goals.

Start by identifying your organization’s top priorities and aligning your skills initiatives accordingly. Use data to demonstrate how closing skills gaps can reduce costs, improve agility, and create new growth opportunities.

Evolve skills frameworks to support agility

Traditional competency models often fall short in today’s fast-paced, dynamic business environment. “Large, complex competency models are hard to build,” David says. “They’re extraordinarily hard to get organizational attention towards. They’re hard to articulate the value proposition to people in the business.” For these reasons, traditional competency models aren’t practical for large organizations and can even dilute HR’s credibility among business leaders.

Instead, it’s time to move toward more flexible, data-driven approaches to skills management. AI-powered tools, like those offered by Betterworks, can analyze real-time performance data to identify and validate employee skills. These tools provide actionable insights, enabling managers to track progress and make better decisions about workforce development.

Ben emphasizes the transformative potential of AI in this space: “We now have tools that are not just educated guesses based on a resume, but they’re actually looking at other data around how people are performing on the job,” he says. “That gives us more comfort, more confidence in the recommendations we’re getting.” By integrating these technologies into performance management systems, you can keep your skills inventory current and actionable.

Empower managers to drive skills development

Managers play a critical role in identifying and nurturing employee skills. Yet many aren’t equipped with the skills and resources they need to fulfill this part of their role. That’s why Ben stresses the importance of building these elements into your manager training programs — something that’s traditionally been lacking. “Managers aren’t really trained on how to look for skills,” he explains. 

Building a skills-based culture also requires a shift in mindset. Managers must be willing to support employee internal mobility, even if it means losing top talent to other teams. “That’s one of the foundational shifts that a lot of companies have to make,” David says, “which is ultimately switching from a mindset of ‘These people are my talent’ to they’re either the organization’s talent in concert with they’re their own people who, individually, each want to have their own bespoke career paths.”

To enable this shift, provide managers with training, conversation guides, and AI-powered tools to help them assess skills and guide development. Promote a culture that values internal mobility and supports employees’ long-term growth.

Want to learn more? Catch the complete webinar on demand.