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Talent Revolution – Why Your Company Needs Skills Management in 2024

January 31, 2024

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“Action and adaptability create opportunity”. This famous quote by Garrison Wynn applies to all types of businesses across various industrial sectors. The combination of transformative events including the COVID-19 pandemic, the Great Resignation, and more have compelled organisations to restructure, introspect, adapt, and find new avenues to fuel and sustain growth. 

There is enough evidence that points towards the widening skill gap within businesses worldwide. A McKinsey study conducted in 2021 revealed that around 87% of companies admitted that they either have skill gaps or anticipate the problem in the next few years. The widening skill gap within organisations is not a positive sign, especially for companies with global workforces and operating models. 

This is why many market players are turning their attention to addressing this challenge before it’s too late. This article touches upon the importance of skill management, why companies need it, and the need to maintain a skills inventory. 

Before we begin, let us understand why companies are facing this problem today. 

What is the Reason Behind the Widening Skill Gap?

Today, most companies recognise the need to fill skill gaps. That said, what are the factors that contribute to the widening skill gap in organisations?

Here are a few key factors:

  • Recruiters are finding it increasingly difficult to find the right talent with suitable skills for a range of job roles. 
  • The emergence and increasing adoption of artificial intelligence (AI) and automation in companies has left a significant gap between the type of skills one requires to deploy and use these new tech advances. 
  • The lack of skill development initiatives or workforce education programs has contributed to the increasing skill gap within companies worldwide. 

Now, let us understand skill management and why companies should focus on creating and maintaining a centralized skill database or a competency database. 

Understanding Skills Management at Workplaces

Companies where their workforce exhibit a perfect blend of soft and technical skills tend to have an upper edge over companies that solely focus on technical expertise.

While hard skills are linked with technical knowledge and skills including data analysis, software development, and so on, soft skills refer to personality traits including empathy, effective communication, and critical thinking to name a few. So, where does skill management come into the picture?

While every individual employee possesses certain hard and soft skills, companies should have a clear structure in place to match the right employees with the right jobs while simultaneously identifying existing and emerging skill gaps. This process is defined as skills management. 

Are Skills and Competencies the Same?

In today’s business landscape, the terms ‘skills’ and ‘competencies’ are used interchangeably and at times, alongside each other. Are they the same? Simply put, yes and no. It is worth noting that competency is a combination of four core elements, including ability, knowledge, behaviour, and skills. Many companies are investing in competency management, which includes developing and identifying employee competencies to aid growth. While skill management and competency management have different definitions, they aim to accomplish similar goals.

In this article, we are using ‘skills management to talk about competencies and skills.

Now, let’s examine why companies require skills management.

Understanding the Need For Reliable Skills Management

As seen earlier, skills management primarily aims to improve the overall productivity and efficiency of an organisation. If implemented correctly, skills management can optimise various internal processes in a company including talent acquisition, retention, and leadership development.

Here’s how skills management benefits companies. 

Benefits for Companies

  • Assigning Roles to Right Employees

Skills management paves the way for seamless resource management and allocation. It offers a clear picture of the different tasks and projects in hand and the most relevant and competent employees to handle them. This clarity enables businesses to reach their business goals with ease as their employees not only complete all the tasks assigned to them but excel at it. 

  • Minimising the Widening Skills Gap With Targeted Training

Many companies around the world provide training and development opportunities for their employees. However, many companies fail to understand the need for targeted training instead of organising a generic development program for all employees. It is important to ensure employees receive guidance and the chance to upskill only across areas where they can apply this knowledge. 

Hiring skilled workers can help fill the skills gap, but it can be expensive due to recruitment, onboarding, and training costs. A more cost-effective approach is to upskill and reskill current employees. This is why targeted training is very important within organisations to ensure employees are equipped with right skills and competencies at all times. 

  • Better Productivity

There is a direct link between skills management and the overall productivity of a workforce. How? When employees with relevant skills are assigned a particular role, they understand the requirement without any confusion. Not only do they understand the task very well, but excel at it as they have the relevant skills. 

  • Better Recruitment and Retention

“The Great Resignation” dominated 2022 as a staggering 50.5 million people quit their jobs last year. The event not only recruiters and companies in a tough spot but also sparked a paradigm shift in workforce dynamics, compelling companies to revisit their employee retention strategies. 

Additionally, current trends suggest that companies are expected to struggle on two fronts – dealing with unsatisfied employees who are looking for a job switch and bridging the talent gap due to crippling talent shortage. Korn Ferry, an organisational consulting firm has predicted that there will be a global shortage of around 85 million employees by the end of 2030 – an incredibly discouraging number especially for companies that are finding it difficult to retain talent. 

Skills management ensures have a bird’s eye view of the skills and internal process’s of a company, improving hiring decisions. This data could also open up the possibilities of hiring internally with some additional training, saving the company significant resources. 

  • Creating Future Leaders

Skills management helps organisations create future leaders. Companies can identify employees with the necessary qualities and attributes to become leaders by leveraging tools such as skills mapping, competency mapping, and skills gap analysis. These potential leaders can then receive the training, work experience, and other support they require to reach their potential.

Additionally, many companies underestimate the impact of unplanned retirement and unanticipated resignations on succession plans. Skills management equips companies to create leaders and ensure they have a strong long-term succession strategy in place. 

Skills Management With Technology

Technology has played a key role in transforming skills management. The increasing reliance on data-driven decision making has enabled businesses to grow at a steady pace and meet their short-term and long-term objectives. Typically, the siloed or isolated approach for skills management and assessment restricted companies from considering the broader context of an employee’s career trajectory. 

Additionally, skills management heavily relied on subjective data instead of real-time data, leaving plenty of room for improvement. The advent of professional services automation (PSA) software have changed the face of skills management by introducing accessible, accurate, and dynamic techniques to boost talent retention and business outcomes. ]

Schedule a demo to learn how ProductDossier’s PSA software can streamline and improve skills management.

Shivani Kumar

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This article is provided by Shivani Kumar, Head – Marketing & Director of ProductDossier, a company having a flagship product ProductDossier PSA Software - An Integrated Project Management Software. ProductDossier PSA helps customer in achieving Business Automation & Excellence.

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