Strategic workforce planning still took place in a largely stability-oriented environment until the pandemic began. This has already changed and will change fundamentally.

To ensure a company’s success, especially in times of change, HR departments need the most accurate and up-to-date understanding of their employees’ skills and skill gaps. Strategic workforce planning and the operational action plans aligned with it are having an impact in many places:

  • Employee engagement has increased by up to 50%,
  • reduced costs for training and development programs by up to 50%; and
  • productivity increased by up to 40%.

Along several building blocks, three basic steps are usually worked on:

  1. Development of a detailed skills taxonomy; sources of knowledge are existing taxonomies, skill analytics and expert insights.
  2. Identification of skill gaps (see slide 2 in presentation); skill-gauging workshops, surveys and skills scraping can be used here.
  3. Development of operational action plans to close the most important gaps; essentially regarding recruiting, training and development, employee retention, performance management, and involvement of external staff.

All this is necessary, but not sufficient! After all, companies are only flexible to the extent that employees are ready to handle any need or future scenario. The following questions are currently being asked:

  • What does flexibility mean for organizational design?
  • How do you build a skills-based organization?
  • What role do workforce ecosystems play in this?

Let’s get started!

What does flexibility mean for organizational design?

Workplaces, or jobs, are predominant structures for organizing work and making decisions about the workforce. A survey conducted by Deloitte revealed the following results:

  • 81% say work is increasingly performed across functional boundaries,
  • 63% of executives say work in their organizations is currently being performed in teams or projects outside of people’s core job descriptions, and
  • 36% say work is increasingly being performed by workers outside of the organization who don’t have defined jobs in the organization at all.
  • Fewer than half (42%) of respondents say their organization’s job descriptions do an “excellent job” of specifying the work that needs to be done.
  • Looking forward, only 19% say traditional jobs are the best way to organize work to fulfill business goals.

Consequently, companies should create more agile ways of organizing work to increase speed and adapt quickly to market changes.  They are transforming into so-called skills-based organizations (SBO) to develop strategically necessary capabilities in a fluid manner (see slides 3 and 4 in presentation).

A SBO provides an integrated system that ensures the workforce is aligned, capable, effective, adaptable, efficient, and inspired. It accomplishes this by moving from managing workplaces and monitoring the work done there to dynamically orchestrating and cultivating ever-evolving skills and work.

How do you build a skills-based organization?

Josh presents seven lessons learned in helping companies develop a holistic competency strategy in his article, “Building an Enterprise Competency Strategy,” published in February. He emphasizes that building competencies is not a new idea: “What is new is the technology, applications of AI, and the idea of using skills in an integrated way for recruiting, development, internal mobility, and pay.”
One of the lessons learned is not to build a skills taxonomy for the whole company at once. Rather, it is more purposeful to focus on one of several possible use cases (see slide 5 in presentation).

ING joins Unilever, Novartis, and several others as one of the companies that are making current capabilities and competencies data-driven and incorporating them into decision-making. On the path to becoming a SBO, ING has defined six key competencies – including data literacy and cybersecurity – that the company will focus on in the coming years.
HR Business Partners design operational action plans based on lessons learned and evaluate the effectiveness and efficiency of initiated measures.
In addition to significantly increased transparency, more data-driven conversations and standardized decision-making are among the early impacts of such an approach.

What role do workforce ecosystems play in this?

Ecosystems are particularly effective where companies need to act quickly and flexibly. In such a situation, internal recruitment is either too expensive or not feasible in the short term. Further qualification or retraining takes some time or too long.

Tech talent is a good example of this. Significant skills gaps exist in companies, especially in seven areas: DevOps, platforms and products, automation, customer experience, cybersecurity and data protection, data management, and cloud.
In Germany, for example, 780,000 additional tech specialists will be needed by 2026 to meet the needs of the economy. In my opinion, this can only be achieved with an appropriate balance between internal skills development, external recruitment, and outsourcing or offshoring.

Three areas of responsibility are important:

Workforce

Develop a clear and surgical understanding of your talent gaps, a practical plan to fill them, and a recruiting approach centered on candidate experience. Top talent interviews with you, not the other way around. Build workforce segments and incorporate the Workforce-priority grid (3Bs; see slides 6-8 in presentation)!

Workforce model

Form small teams of experts with a clear mission and let them execute it – as detached from hierarchies and administrative baggage as possible.

Workplace

Focus on keeping tech talent happy; productivity and performance will follow. Stop “developing” good employees into bad managers. Create a work environment that nurtures talent through diversity and a supportive culture.

Successful leaders recognize the complexity of these ecosystems and adapt the management practices outlined in the article to support these new systems as companies increasingly rely on internal and external employees – not just in the tech environment, by the way. This is referred to as “orchestrating workforce ecosystems.”

The recent MIT study “Future of the Workforce”, conducted in collaboration with Deloitte, shows that such an orchestration is a multi-layered undertaking that requires the integration of many corporate functions: senior executives, business unit leaders, procurement, finance, legal, IT and HR.

Companies that succeed in this endeavor are characterized by five features:

  1. They closely align their workforce planning and HR strategy with their business strategy.
  2. They hire and engage the internal and external talent they need.
  3. They closely coordinate cross-functional management of internal and external workers.
  4. They support managers seeking to hire external workers.
  5. They have leadership that understands how to allocate work for internal and external contributors.

I would like to emphasize the last two points in particular:

  • We see leaders adapting to a changing workforce in which they have more input but less control.
  • Leaders are often concerned with cultural issues: How far should they go to include external employees in the existing culture? To what extent do the principles and practices of diversity, equity and inclusion apply to external employees?

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Conclusion

The emphasis on competency data rather than jobs and positions has the effect of breaking down traditional silos in HR between workforce planning, workforce development, and internal mobility. This ultimately reshapes the way employees are recruited, developed and retained within the organization.

Nearly 90% of executives believe that competencies are increasingly important to the way companies define work, deploy talent, manage careers, and value employees. However, only up to 30% are applying skills-based approaches at a significant scale.

74% of executives, according to recent research, believe that effectively managing external employees – freelancers, gig workers, professional service firms, etc. – is critical to their success. But only 58% believe, as of today, that their companies have an integrated approach to managing internal and external employees.