A complete guide to skills management: what it is, benefits, and examples

When you call AT&T tech support, you expect that the specialist you’re connected to will have strong technical expertise, relevant industry experience, and a commitment to providing you with accurate information.

When you walk into an Apple store, you assume that the staff are tech-savvy and exude Apple’s calm. And you assume that Apple corporate has creative, innovative specialists that can keep developing products like iPod, iPhone, and iPad.

When you board a Southwest Airlines aircraft, you expect friendly people instead of grumpy and surly attendants.

Managing skills start with identifying critical positions in the organization and then identifying the right people to fill them. A skills management strategy must encompass the breadth and depth of the organization.

Just as daily life skills have evolved (we’re not churning our own butter anymore!), so have the skills needed for daily work-related tasks. It would be a huge mistake to put all the eggs in one basket and learn only to depend on current technology to provide for work needs.

The work system is far more fragile than any of those that have come before it. One major disaster, like the COVID-19 pandemic, can disrupt work processes globally and set back many companies.

Skills management helps organizations be prepared for another such major event rather than simply wishing it will never happen.

Skills management is understanding the current workforce’s skills and talents and finding a way to develop and use those talents in the workplace.

Over the last decade, we have witnessed a change in the competencies required in the competencies required of employees, mainly due to automation and technological advancements. As a result, HR leaders face the unique challenge of managing and upskilling their existing workforce to fill talent gaps. In some cases, the skills required are not readily available. Organizations have only two options left: either to upskill, reskill, or cross-skill the current workforce or to hire new employees externally.

To start dealing with the challenge of matching employees’ skills with those that will be required in the future, organizations need proper knowledge of skills currently possessed within the organization and skills that will be required in the future required in the future. However, when this knowledge is needed, it’s often costly and time-consuming to acquire and maintain it, and it’s often outdated.

Employing skills management systems can prove efficient for modern organizations. A skills management system (SMS) is a dynamic system that helps HR leaders to identify employees’ skills, regularly re-check what skills are available, and capitalize on this knowledge. For example, a skills matrix is a well-accepted skills management system used to record and view the skills of all employees in an organization. Skill types consist of a set of experiences, qualifications and skills like hard skills and soft skills.

The success of any company depends on the clever definition of its workforce strategy and the capacity to execute that strategy intelligently. Skills management is essential to balance an organization’s real needs with employees’ skills. There are several benefits of incorporating a skills management system in an organization.

Key employees are a group of individuals who have demonstrated superior accomplishments, have inspired others to attain superior accomplishments, and embody the organization’s core competencies and values. Their loss or absence severely retards organizational growth because of their disproportionate impact on current and future organizational performance. Skills management helps you continuously identify the skills of key employees or those with potential and develop those employees’ skills for a robust internal talent pipeline.

Bill Gates once said, “Take our twenty best people away and I tell you that Microsoft would become an unimportant company.”

Identifying and developing replacements in case key employees leave is vital to ensure organizational operations run smoothly. Skill gaps in critical positions that need replacement are highly disruptive, costly, and distracting to the organization.

When an organization is rolling out a new product or service or merely updating processes with new technology, the HR leader needs to put together a team, and that team could be missing some future-oriented digital skills. These missing skills lead to a skills gap. Skills management allows you to spot and close these skills gaps quickly and easily.

HR experts believe in continuous improvements in technical abilities in the digital transformation era. According to a Korn Ferry report, “the US could lose out on $162 billion worth of revenues annually unless it finds more high-tech workers.”

Training and development programs need to be promoted to improve and update the skills available in an organization. Skills management allows HR leaders to arrange training according to employees’ future skill needs.

A critical aspect of succession planning involves evaluating people’s skills in the organization and identifying those employees who can ascend to top management roles. A skills management system is a good starting point for managers to compare the skills vital for success in a given role to the skills that potential candidates currently possess.

Succession planning saves time and costs on hiring new leaders from outside the company. An internal employee is aware of the organization’s current strategies allowing for continuity of operations. In key positions, quick succession can prevent a halt of critical operations.

The risk of a coming recession is forcing many organizations to re-examine their skills management approach. The most forward-looking companies are preparing for the consequences of a financial crisis.

The following best practices ensure that your skills management process is working correctly.

Every organization has limited financial resources for training and developing employees. HR managers can start with analyzing which skills are important to develop first so as to invest in training that bears immediate results.

For example, there may be employees whose overall performance is average but who possess a critical skill that makes them highly valuable to the company. While these may not be high-potential employees, they could still play a vital role, and the organization cannot afford to lose them. Therefore, your money might be best spent on creating communication, recognition, rewards, or training programs to help you engage and retain those employees.

Most talent decisions are made on gut instinct. In the past, managers were applauded for having a “good eye for talent,” which led to poor choices in terms of promotions and training. Moreover, decisions based on gut instinct are biased, leading to negative feelings among employees. HR usually takes the traditional approach of talking to managers about how people should be redeployed and then comes up with a plan.

Collecting skills availability data and creating skills profiles can lead to much better hiring and retention results, as the numbers speak for themselves and show how successful an employee might be in a new position.

The trend of building adaptable skills has been in the works for some time, and the major shifts in the workforce have greatly solidified its reasons. Generic leadership skills include a result-oriented approach, problem-solving abilities, and excellent communication skills.

However, while these skills might have helped leaders to be more effective in their job in the past, there are other competencies and skills that directly affect business results. Many companies have realized that their traditional leadership competency models do not reflect what is needed to successfully address rapid economic changes. Because of this, companies are shifting from a reliance on traditional skills and competencies to more modern, flexible, and adaptable leadership skills.