Why are skills the currency of the future business world?

July 20, 2021
8 min

Why are skills the currency of the future business world?

Employees are the heart of any and every organisation and as organisations grow and evolve, so must their employees.


More than anything, the pandemic has highlighted a glaring shortfall. As much as businesses focus on tangible assets such as inventory and machinery, or intangible assets such as IP and brand, we often overlook the single asset that makes it all possible– our employees.


As the world is changing and competition among businesses is increasing, business leaders need to invest in rapid and flexible workforce transformation and skills development to help their employees grow and evolve with the organisation.


We often talk about talent development and retention, but what do skills have to do with it, and why is identifying and closing skill gaps and upskilling so important?

Challenges faced by employers in a volatile business climate

The pandemic has disrupted business operations and accelerated the need for workplace transformation, affecting businesses across varied industries. This uncertainty has forced many businesses to pivot, such as by embracing e-commerce, online channels or simply to innovate their business processes.


And as businesses pivot, businesses struggle to understand their current workforce’s capabilities, to identify the skills their workforce needs to pivot and to understand and close emerging skill gaps by ensuring the necessary training is done.


More often than not, these businesses fail to properly engage the right upskilling or development training to smoothly transition their employees.


This is true both for SMEs and startups, who have limited resources and experience in workforce development and also for large companies and MNCs, who have a huge workforce to manage and lack data or automated processes to facilitate the transformation.


In a survey from PWC, 74 per cent of CEOs said that a lack of availability of the right skills would constrain growth and hamper companies’ ability to tackle the impacts of the COVID-19 pandemic.


Only 18 per cent of CEOs said they had made significant progress in “establishing an upskilling programme that develops a mix of soft, technical and digital skills” and only 24 per cent of CEOs said they had significant progress in “Defining skills needed to drive future growth”.


Ten per cent of companies in the survey said they had made no progress at all. CEOs are struggling to put their intentions into practice.

Importance of skills management in a workforce

There is an ongoing revolution in how companies are addressing their organisational structure and workforce development. Historically companies have organised their company into mainly job role clusters, with development pathways based on job role seniority.


Companies would then provide training based on the job role, where every staff member at certain job levels will be required to attend standardised training.


However, as industries continue to be rapidly disrupted, and new job roles are required with new and complex skills requirements, companies are struggling to keep up with the pace of change, and employees are subsequently affected in their ability to keep up with the changes in their skills requirements.


Businesses have started to become more granular in their approach, developing competency models and frameworks, and further detailing jobs into skills and skills proficiency levels.


This change has created more complexity for businesses and has driven the need to start understanding skills more, such as to develop a unique skills language for the company, to define the skills required within the company, as well as identify and validate the skills that their workforce possesses.


An effective skills management system in a workforce will not only help in retaining employees but will also create an agile workforce that can seamlessly pivot along with their organisations in case of an industry or market-wide disruption.


A characteristic of the current labour market is the limited availability of in-demand skill sets, which naturally pushes companies to spend on workforce development. It is cheaper for employers to build than buy talent. Developing key skill sets internally can be less costly than hiring new talent, which can cost as much as six times more.


An agile workforce translates into an organisation that is future-ready – ready to meet the needs of the organisation tomorrow, today. An agile workforce also supports the values of productivity, innovation and creativity – creating employees who are active stewards of the organisation’s vision and mission.

If the benefits of skills management are so extensive, why isn’t everyone doing it?

Creating a holistic skills management system in the workforce is no easy feat. It takes a large pool of resources, commitment and organisation to be properly executed. Coupled with the heavy workload from day-to-day operations, it’s near impossible to find the time to establish and execute this process.


Currently, it’s challenging for companies to have an understanding of their workforce’s current skills and capabilities. Typical data sources such as CVs and resumes are unstructured data that is difficult to consolidate, digitise and make sense of, and tend to be outdated data points without relevant skills information in the first place.


Secondly, every company is unique and thus finds it challenging to come up with a customised framework or “language of skills” for their own company. The reliability of the data is also questionable– companies prefer to have a validated assessment of the skills of their workforce.


Finally, companies struggle to implement any change as current systems and processes for skills mapping are manual and unconsolidated, resulting in painful implementation and pushback from the workforce in supporting the change process.


Creating an effective skills management system: Where to begin?

To start off, it’s important to state that every organisation is different, and so is every team member. As a result, skills management practices are highly varied between each organisation. But fundamentally, the capabilities that are required share similar characteristics.


To bridge skills gaps, the organisation needs to have a deep understanding of the skills and capabilities of its workforce before taking remedial action.


As part of this ‘Skills Intelligence’, it is important for any organisation to have the knowledge or understanding of their employees’ skills and proficiency, and to have the ability to assess and access the type of skills needed for their business operations.


A key factor of success here is in the ability to build a unique library of skills personalised to the company’s context – a unique skills language. Skills databases will need to be continuously upgraded as the market evolves and the need for different skillsets changes.


This process will have to be rooted in truth and facts, which is where the importance of utilising current labour market information to understand the latest market skills characteristics is required.


Secondly, a system and process for identifying, collecting, validating, consolidating and analysing internal skills data based on the company’s unique skills language need to be set in place.


Buy-in and support from the employees of the organisation are essential for any change initiative to take place, thus relying on manual methods which are painful, tedious and slow would ultimately lead to resistance and failure.


A structured and systematic system, preferably utilising technology for ease of use in collecting and managing the data, would accelerate the process and reduce friction as well as costs in time and effort to collect skills data.


A detailed skills library will serve an organisation in many ways – such as providing a database for managers to identify missing skills from their team members, supporting deployment and identification of talent for various roles based on skills fit, ensuring that fresh trainees or employees are given the right training to diligently perform their tasks, or simply having a data-driven real-time dashboard to truly understand the company’s skills assets and make better decisions.


AI and big data in human resource practices

Digital technologies are great enablers of change, across the many facets of business and processes. With the help of AI, businesses can derive the benefits of accessing skills data insights at their fingertips, reduce labour-intensive processes, and enable new approaches such as the ability to build their own unique Skills Bank and Skills Intelligence databases.


AI can allow us to develop, aggregate, and apply, both internal and external data, to plan and create a holistic talent strategy plan.


This removes the labour-intensive processes that typically bogs down the HR departments, saving both time and financial resources by up to 90 per cent.


This concept is not just a sci-fi dream, it’s quickly becoming a reality. AI-powered transformation platforms are already here, complete with the ability to reference external labour market information, collect internal skills data, and create a unique library of skills for any workforce.


These platforms are able to facilitate access to a wealth of market data to identify future-ready skills and create development roadmaps to guide employees’ personal development while empowering them with self-directed career and skills development.


When I founded JobKred, this was the exact market gap that I was determined to solve, using data science technology to accelerate human capital development.


Especially in Southeast Asia, there is a lot of untapped talent that has the right capabilities but not the right skill sets that the market needs, and help provide clarity and direction to both enterprises and individuals in their skills development has been a key mission for us.

As an AI-powered skills intelligence and competency management platform, JobKred was created to ultimately reduce employee attrition rates, identify and develop missing skills, and transform organisations to be future-ready through effective and data-driven skills development.

Working with clients from Fortune 500 enterprises, top-ranked universities, government agencies and international aid agencies like the World Bank, JobKred has gained immeasurable experience, expertise and data in the whole life-cycle of skills intelligence and workforce development.

The future of HR practices

Employers need to be nimble and embrace new ideas to transform their business, traits that are key to rethinking and reshaping the future of work in the current economic climate.


This includes taking the leap forward in job redesigning, adopting digital technologies, and taking on new ways to work as well to rapidly adjust their business’s competencies, to reduce employee attrition, increase business agility and extend their business life cycles.


The significance of an agile workforce will continue to increase, and HR will play an increasingly important role in making better and more informed decisions by utilising skills intelligence.


Skills are the currency of the future in the business world. Just like a currency, it’s more than just about accumulating it in a war chest for future use – it’s about finding and gathering the appropriate resources, growing the assets in the right way, and utilising them at the right time to further develop your businesses.

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