Skills taxonomy in the modern workplace

The era of rapid technological advancements and evolving skills requirements has diminished the traditional college degree's status as the sole measure of a candidate's potential. We are instead seeing today, more and more companies prioritising a skills-based hiring strategy over degrees, a strategic shift that is revolutionising the talent acquisition landscape.

The rise of skills-based hiring can be attributed to several factors, each contributing to a more holistic and efficient employment ecosystem. One of the key drivers is the fast-paced evolution of technology, which has rendered certain skill sets obsolete while creating an insatiable demand for new ones. As industries digitise and automate, employers seek candidates who possess the technical prowess required to navigate this new world of work. This change underscores the importance of a workforce that can quickly adopt new technologies and make a significant contribution to the innovation-driven economy.

At the heart of this ongoing transformation lies the idea of a skills taxonomy, a crucial tool for locating, classifying, and utilising the variety of skills present in an organisation, and a tool that is increasingly indispensable in the face of rapid technological change.

The current labour market in India is characterised by unique challenges. According to recent data from the World Bank, roughly 9% of India's labour force may lose their jobs to automation by 2030. Unemployment remains low, yet organisations struggle to fill open positions, partly due to skills gaps and the rapid pace of technological change. Moreover, many college graduates lack the skills necessary for immediate employment in their chosen fields. This disconnect has driven companies to reconsider traditional hiring practices emphasising candidate potential, practical skills and experiences over degrees.

The goal of skills-based hiring is to promote inclusivity in the workplace in addition to technical proficiency. By emphasising skills, employers can break down barriers based on age, gender, or educational background and access a wider talent pool. This strategy allows people with non-traditional career paths to demonstrate their skills, resulting in a more inventive and diverse workforce.

This inclusive hiring approach is essential for realising the potential of the populace in a country as diverse as India. It uses diverse skills that could go unnoticed in a more inflexible, qualification-focused system.

In India, according to a report by EY and iMocha, 14% of HR leaders focus on building future skills, 7% on establishing skills-first career paths, and 5% on improving talent mobility and rewards, indicating a shift towards skill-centric HR objectives.

Additionally, industry-specific priorities vary, with tech companies focused on building future skills and career paths, banking, financial services and insurance companies focused on adapting to rapid industry changes and AI integration, and telecom companies focused on addressing talent shortages and enhancing research and development (R&D).

A skills taxonomy is an organised framework that classifies skills according to their nature, degree of complexity, and applicability to particular roles. This taxonomy-style approach is essential for modern-day businesses adopting skills-based hiring strategies and developing a more flexible and agile workforce. With a skills taxonomy, organisations can more efficiently match candidates to job requirements, resulting in a better fit and higher performance, by methodically identifying and cataloging the skills required across various job roles.

Creating a comprehensive skills taxonomy involves several steps that include:

*Identification of skills: Establish which skills are needed for which roles within the company. This covers hard and soft skills, like teamwork, communication, and problem-solving.

*Classification and categorisation: Put each skillset into groups and subgroups. For instance, programming languages, data analysis, and system administration would be categorised as technical skills, while leadership, cooperation, and flexibility would fall under soft skills.

*Validation and refinement: Based on input from leadership, managers, employees, and market trends, the skills taxonomy should be updated and improved regularly, ensuring your taxonomy is kept current and in-line with the organisation's changing requirements.

The implementation of a skills taxonomy yields various strategic advantages for organisations. It enhances the recruitment process by shifting the focus to specific skills rather than academic degrees, expanding the talent pool to encompass individuals who have acquired expertise through alternative pathways such as vocational training, online courses, or hands-on experience. Moreover, it strengthens talent management by furnishing a coherent framework to evaluate employee skills, pinpoint gaps, and devise developmental strategies, ensuring that employees possess the requisite skills for present and future job demands.

Additionally, a skills taxonomy fosters workforce agility in an ever-changing business landscape by facilitating more flexible workforce planning and promoting a clear comprehension of the skills accessible within the organisation. It bolsters employee development and retention by identifying the skills essential for career progression and providing targeted training and development opportunities, elevating job satisfaction and retention rates.

Workforce agility encompasses an organisation's ability to predict, leverage, and respond to changes and use them as opportunities to advance the organisation's goals. A meticulously developed skills taxonomy assumes a pivotal role in cultivating this agility, with key skills taxonomy functions including:

*Empowering organisations to align employees with projects or roles that complement their specific skillsets: This ensures the appropriate allocation of human resources, enhancing operational efficiency and productivity. For instance, in a project necessitating proficiency in AI and data analysis, the skills taxonomy can expeditiously pinpoint employees possessing these skills, facilitating a prompt and effective response.

*Enabling organisations to proactively discern burgeoning skill requisites and devise training initiatives to address them: This guarantees that personnel are consistently equipped with contemporary skills, thus prepared to confront novel challenges as they materialise. For instance, with the emergence of new technologies, the skills taxonomy can underscore the necessity for training in these domains, enabling the organisation to maintain a forward-looking stance.

The move towards skills-based hiring is imperative for modern organisations. Implementing a robust skills taxonomy helps companies identify, categorise, and leverage diverse skills within their workforce. This approach enhances recruitment and talent management and drives workforce agility, enabling organisations to thrive in a rapidly changing business environment.

This article is authored by Nishchae Suri, managing director, Cornerstone OnDemand, India.