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HR leaders can play a critical guiding role in skills-based transformation

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As skills-based hiring becomes more popular, HR leaders will serve a vital role in helping companies move past the theory and promises of being a skills-based organization and toward a more realistic transition, according to a May 9 report from McLean & Co.

The skills-based operating model is agile and can pivot quickly, but to do this, organizations must completely rethink the definition of work. To start, HR leaders can help companies become “skills-aware” to bridge the gap between the job-based and skills-based models, McLean said.

Even organizations that wish to become skills-based are often still using a job-based model, one exec said — but organizations can still become “skills-aware,” which may be more feasible at first.

“HR leaders are influential decision-makers regarding the feasibility, appropriateness, and scope of a skill-based transformation,” Jodi Callaghan, director of HR research and advisory services at McLean & Co., said in a statement. “HR’s strategic interpretation of the sensationalized promise of skills enables organizations to translate the noise into realistic opportunities for the organization.”

Becoming skills-aware can allow opportunities to employees based on skills, potential and career goals, Callaghan added. The report outlines the risks and benefits of a skills-based focus, the challenges of moving along the skills-based spectrum and how organizations can be proactive.

For instance, McLean & Co. recommends that organizations meet certain fundamental concepts before moving along the skills-based spectrum, such as leadership buy-in, cross-functional collaboration and resourcing. Although some organizations seem to be motivated by a sense of urgency around skills-based hiring, the fundamental conditions must be in place to move along effectively, according to the report.

The majority of employers don’t yet practice what they preach with skills-based hiring, according to a report from The Burning Glass Institute and Harvard Business School. Most companies haven’t dropped degree requirements or increased the share of workers without degrees. In fact, among companies that announced policy changes, about 45% appeared to make a change in name only and didn’t have a meaningful difference in their hiring behavior.

More than 80% of workers want a skills-first approach, according to an EY and iMocha survey, and said they would stay longer at a skills-based company. Among companies focused on this, HR objectives such as career pathing and internal mobility are important, but integrating skills data into HR processes remains a key challenge, the report found.

Skill-building and career development continue to be top organizational priorities, especially in a rapidly changing AI era, according to a LinkedIn report. Major L&D focus areas for 2024 include aligning learning programs to business goals, upskilling employees, creating a culture of learning, helping employees develop their career and improving employee retention.

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