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This is first in a series on Skills Management.  It includes discussions on the establishment of a skills management program, skills assessment process, skills architecture, skills library, best practices, and case studies.

“Individual skills are corporate assets. In total, they represent a company’s intellectual wealth directly tied to the bottom line.  Superior skills are the weapons needed in the struggle to achieve competitive advantage.”

“Find me a Mechanical Engineer with knowledge of AutoCad, DC Motors, Drive Chain Design, Noise/Vibration, CATIA.”

“Put together a strategic training plan that addresses our mission-critical IT skills that need to be developed.”

“We need to hire more web programmers. What skills should we be looking for?”

“What skills do I need to be successful in my job and for career development?”

These questions and hundreds like them are asked every day.  A Skills Management Program will answer them.

Aging skill sets, retirement, new technologies, mergers, culture changes, budget constraints, global competition, and other factors put numerous companies at risk of talent loss and, as important, underutilization of people.  Yet, many ignore the most fundamental solution to address the threat of under-qualified staff – establishing a skills-based organization.  Whether competing globally or locally, an agile, properly skilled workforce will not only provide a significant return on investment, but also stimulate people to be more motivated, productive and fulfilled.  And, most importantly, talent will be available to capitalize on growth opportunities.  In addition, it is found that a cross-trained staff is more nimble, competitive, and efficient than a staff only composed of specialists who each have a single skill set.

Building a skills-based organization starts by proving its value and return on investment.  Skills identified as core to business goals are linked to positions and roles.  Standards for incumbents clearly identify requirements for success, and can include requirements for certification, education, and regulation.  These skills standards flow throughout the organization in a chain that includes workforce planning, recruitment, employee assessment, career development, training, performance, and succession planning, and assure that people understand what is required of them as they join the organization, conduct their assignments, identify career opportunities, and more.

Establishing a skills-based organization is not as difficult as it may seem.  In simple terms, two things are needed:

• Practical human resource processes and practices that tie skills to the various elements of those functions and link them throughout a chain from recruitment to succession planning.

• A comprehensive “skills architecture” that reflects the proficiency and content standards of the organization.

We will discuss in later blogs about human resource processes and best practices, as well as skills architecture that contribute to a successful skills-based management program.

What is Skills-Based Management?

Typically, Skills Management has been thought of as “skills inventories,” which have been around for decades.  Ever since the first manager wanted to know the skills, abilities, talents, and other attributes of his/her employees to meet business objectives, various efforts have been made to capture this kind of information.  But, then as now, collecting skills information, at least for the first time, was always easier than finding out what to do with it.  The second time, of course, people lost interest because they did not gain any benefit from the first skills gathering exercise.  So, you want to get it right the first time. Skills-Based Management, on the other hand, is an approach that provides real and measurable benefits to the organization.  It flows through the organization and contributes to the major constituencies of the business.  That includes each individual employee, managers/supervisors, training management, human resources, and senior and line management by focusing on their specific human capital needs and obligations. 

Phases for Building a Skills-Based Organization

There are three “phases” through which an organization must travel before reaching full benefit from a Skills-Based Management Program.  They are skills identification, skills acquisition and skills application.  Skills Management deals with skills identification and skills acquisition.  Performance Management addresses skills application in the form of how people apply their skills on the job through their assignments, objectives and tasks.  Skills identification is established by the creation of skills content and proficiency standards for job titles, and followed by skills “assessment” by the individual and manager.  It is important to understand the meaning of the term “assessment” versus “rating”.  A skill assessment refers to the knowledge and demonstrated capability, and is used to determine a person’s need for training and development.  The term “rating” often is within the context of performance that can impact raises and promotions.  Therefore, we stay away from using the word “rating” in skills management because an assessment can be skewed if an employee equates it with performance rating.  Skills acquisition is based on the establishment of development plans and the enrichment of those skills which must be developed.  Skills application is “rated” in terms of accomplishment and in the context of performance.

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Organizational success is based upon, among other things, having the right people in the right place at the right time.  Although somewhat of a cliché, this only can happen when the “right” people are in the organization.  And that starts with hiring the right people.  That means having a good understanding of the skills required for open positions and making sure that people who are hired meet not only immediate requirements but have the broader set of skills for growth and development within the organization. What Is A Skill? The most fundamental requirement to be defined before a skills-based program is implemented is determining what a “skill” means to your organization.  Often, there is confusion between a skill and a competency.


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Competencies Drive Skills

A skill is the ability to apply a learned function, process or tool; expertise and proficiency relating to a specific area of knowledge that can be demonstrated, measured and verified.  A competency is a behavior, attitude or fitness that is exhibited through action and performance; often relates to a role and the way the incumbents conduct themselves in that role; the environmental conditions as influenced by people as they carry out their assignments.  An effective program often combines both skills and competencies to describe the requirements of a role, title or position. In reality, a skill can be almost anything you want it to be as long as it meets the following criteria:


• DEFINABLE:  A skill must be able to be described in English or other local language for people to understand.  If it cannot be described clearly and precisely, the ability to accurately demonstrate it on the job according to organizational requirements and individual expectations is open to interpretation.

• MEASURABLE:  A skill must be able to be gauged quantitatively, or at least in some order of ranking, so proficiency standards can be assigned and assessed.

• VERIFIABLE:  A skill must be able to be corroborated and confirmed in a consistent and impartial way throughout the company.  Use of a common yardstick for defining and measuring skills is critical for acceptance and equity.

• TRAINABLE:  Training and development solutions, including coaching and on-the-job training assignments, must be available in order for people to improve.  Lack of training or development activities severely hinders a person’s ability to enrich a skill. 

• DEMONSTRABLE:  People must be able to prove their skill on the job and demonstrate the various levels of proficiency.  If a skill and/or its results cannot be observed in a working environment, it should not be considered.

• DISCUSSIBLE:  There must be sufficient material and/or experience to permit a constructive dialogue between the individual and the manager.  People have to be able to talk about skill development and prepare plans for improvement.  Embarrassing or sensitive topics may not lend themselves to discussion. • SUBSTANTIAL:  There must be some significance and robustness to the skill.  It should not be something which can be learned in a few hours but rather something that can grow over time.

• VALUABLE:  The skill should have some value to both the individual and the organization.  Aged skills that have no relevance within the company should not normally be part of a skills library.

As an example, the president of a unit of a major manufacturer insisted that all of his staff have a competency called “perception”.  Although perception can be defined, there is no objective way to measure it or train employees to improve it.  People could not figure out how to assess themselves in “perception” and essentially ignored it.  In general, those kinds of “skills” degrade a skills program and must be avoided. On the other hand, a skill such as “system design” not only meets all of the criteria listed above but also is an example of a transformational skill – one that changes at many levels.  System design takes years to master while the skill itself continues to evolve as tools, technologies, and methodologies impact the way a system is designed (think web, mobile, mainframe, personal computer and other applications.)  When system design was first used for mainframes fifty years ago, it was to design applications that were transaction-based where data went into the computer, was processed, files were updated, and reports were prepared.  So, a top system designer in those early years would require a significant amount of training to learn system design today.

In our next On Skills Management blog, we will discuss the architecture of skills management including the skills library and skill groupings, and how a company can build their own unique, mission-critical skills architecture.

Follow SuccessFactors on Twitter: @successfactors

Steven Venokur is a managing partner with People Sciences, Inc. and a contributing partner with SuccessFactors.  He has built innovative skills and talent management solutions for more than twenty-five years.

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