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A new study points to need for skills-first HR to bridge emerging talent shortages

Most businesses are poorly prepared for bridging emerging skills gaps and need to align the supply of skills with organisational strategic goals, according to a report commissioned by the L&D Skillnet in collaboration with Skillnet Ireland and Learning & Development Institute (L&DI)

A skills-first approach breaks down the barriers between different areas of an organisation and gives them greater visibility of the skills available across the whole business.. Photograph: Brendan Lyon

Thu Aug 3 2023 - 05:00

Talent shortages are forcing HR practitioners to change their approach to filling skills gaps. This is among the main findings of Skills-First: An emerging approach to managing human resources for the new world of work, a report commissioned by the L & Skillnet in collaboration with Skillnet Ireland and Learning & Development Institute (L &). L & Skillnet is the business network that supports the HR and learning and development professions in Ireland.

The research was carried out by Professor David Collings of Trinity Business School and Dr John McMackin of Dublin City University Business School.

The study suggests that most organisations are poorly prepared for bridging emerging skills gaps and points to a need to shift the focus of HR from jobs to skills, or skills-first HR. Instead of simply recruiting for jobs as vacancies arise, HR should look at the skills needs of the organisation as a whole and match them to the skills that already exist there.

“Irrespective of size or sector, businesses within Ireland and across the world are facing challenges in attracting and retaining workers with both the talent and skills they require,” says Tracey Donnery, director of policy and communications with Skillnet Ireland. “The research outlines the emerging area of skills-first human resources and demonstrates the need to align the supply of skills with organisational strategic goals. At its core, skills-first HR puts skills front and centre of an organisation’s HR strategy.”

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L&DI, formerly the Irish Institute for Training and Development, is the promoting body for the L & Skillnet. Chief executive Sinead Heneghan describes the skills-first approach as one where skills become the currency used to deliver organisational objectives. “It’s about matching the current just-in-time demands of the organisation with the skills of the people working there. It’s a very agile approach.”

The potential benefits of the approach are clear. “Instead of going outside to recruit talent, it is about looking at the skills you already have and how the people you have can be developed,” says Donnery. “It also supports the career development and engagement of employees. It’s not a linear career pathway, employees can take up more rewarding roles by moving into different areas of the business.”

At the launch of the Skillnet Ireland Skills-First HR initiative were (left to right): Tracey Donnery, director of policy and communications, Skillnet Ireland; John McMackin, associate professor, work, psychology and strategy group; Professor David Collings, chair of sustainable business, Trinity Business School and Sinead Heneghan, chief executive, L&DI. Photograph: Brendan Lyon

“It supports retention strategies where people might be at risk of leaving,” Heneghan adds. “If you can find more interesting things for them to do based on the skills they have, they will be more likely to stay. People can move to different areas and roles and acquire new skills at the same time. You can then go out to the market to fill the gaps.”

That increased career mobility is enabled by the data-driven approach that lies at the heart of the skills-first approach. The report outlines a number of steps organisations can take in adopting the approach. The first is the development of a skills taxonomy to create a common language to define the skills that exist in the organisation. After that comes a skills audit to establish the skills that are already there. Then comes the demand analysis, which identifies the skills required now and into the future. Finally, fundamental changes to current job architecture and career pathways are required.

In the traditional model, people moved upward in hierarchical structures within different departments or geographic locations and rarely moved sideways into other areas. The skills-first approach breaks down the barriers between different areas of an organisation and gives them greater visibility of the skills available across the whole business.

“It creates an organisation-wide understanding of the skills needs of the business,” says Heneghan. “In the traditional approach, one department or business unit may not know that the skills they need exist in another part of the organisation. At the same time, employees may find themselves in a role where they are not demonstrating skills to their full potential. The skills-first approach allows talent to be shared across different business units.”

The change is not easy, however. “It requires a restructuring of how HR functions,” Heneghan says. “While the survey found a shift to skills-first HR, it also found that it’s still in its infancy: 98 per cent of respondents said they were aspiring to become a skills-first organisation but fewer than 20 per cent were doing it in a meaningful way. The trend is in the right direction though. Organisations are piloting and trialling initiatives in different areas of the business, and this will help them roll out the approach to the whole business.”

Success will ultimately depend on buy-in from the senior leadership, she concludes. “It needs to be seen as a response to a business need, not as a HR initiative. It needs to be seen as a strategic business solution by those at the top.”

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