Impossible-to-solve Rubik's Cube

Is It Time to Automate Your Workforce Skills Taxonomy?

May 18, 2022 Talent Management
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By Sarah Fister Gale

Reskilling, upskilling and closing the workforce skills gap have been at the center of many discussions about the workforce challenges companies face as they plot their future. Underlying the success of these initiatives is a clear understanding of the current state of employee skills and what is needed for the future. That's not to mention clearly identifying what the most critical skills are.

That's where a skills taxonomy comes in. A skills taxonomy is a structured list of workplace skills required to succeed in every role in the organization. It is the inevitable offshoot of the skills-based hiring approach that demands that HR leaders, recruiters and managers vet candidates and employees based on skills rather than their accomplishments.

The idea is that when companies understand the skills required to do a job, it makes it easier to select and compare employees, identify training needs and fill performance gaps. But creating a skills taxonomy is not so easily accomplished. A growing crop of technology providers hope to help.

The Challenges of Building a Skills Taxonomy

A skills taxonomy is a great idea, except no one is really sure how to translate job descriptions into a quantifiable list of workplace skills — or how to use these lists to hire and train employees.

“Ask 10 people what skills a manager needs to do their job, and you’ll get 10 different lists,” said Simon Carvi, co-founder of HR tech company Huneety. Even if the lists are similar, the way different people describe skills varies, which makes a consistent description difficult to build.

They are also not interchangeable across similar roles. The skills a person needs will be based on the work they do and who else is on their team, said Steven Forth, co-founder of Ibbaka, a consulting and technology development company.

“New skills come up all of the time in the context of what the business is doing,” he said.

When a new team is formed or the project parameters change, the skills required to do the work evolve. “It is never just one skill that matters, it is the relationship between skills and how they are used on teams that are important,” Forth said.

If HR leaders do successfully build a skills catalog and attach it to every job description, it isn’t static. In a constantly evolving marketplace, the skills needed to succeed in any role keep changing, which makes creating a skills taxonomy an endless cycle.

“It’s a slow, biased and outdated process that no one can do alone,” said Holger Mueller, vice president and principal analyst for Constellation Research, a Silicon Valley tech research and advisory firm. 

But, as with all HR dilemmas, the HR technology space is rushing to fill the gap.

Related Article: The Talent Marketplace: A Skills-based Revolution in HR

Is It Time to Automate the Skills Taxonomy?

Several emerging and existing HR tech companies are attempting to tackle the skills taxonomy challenge with applications that generate custom skill directories that can be applied across the HR landscape.

These vendors argue that when companies leverage skills taxonomy technology, they get a clearer picture of what skills they have in the organization, how new skills are emerging to support changing needs and where there are gaps that must be filled. These insights can support all aspects of talent management, Mueller said.

“An automated skills taxonomy supports talent acquisition, compensation, relocation, and learning and development,” he said.

An automated system can also prevent great talent getting promoted into the wrong roles, like promoting your best coders to managers, Forth said. “A great coder is 10-times more productive than an average coder, so when they get promoted to management, the team loses productivity,” he said.

Instead, the insights generated by the skills taxonomy can help companies understand what skills are most valuable for the organization and where. Leaders can then find other ways to incentivize their best people through higher salaries and benefits, rather than promoting them into different roles altogether. It’s one of many ways these platforms can help companies reimagine talent management, Forth said.

Skills taxonomy technology is also helping companies recognize the value of soft skills, like adaptability, creative problem-solving and lifelong learning, Carvi said. He notes that the workplace skills any company needs to succeed will keep changing as their customer base evolves, the market changes and they launch new projects and products.

“Having people who are adaptable and able to learn fast makes it easier to rotate people into new roles,” he said.

Related Article: Have Skills, Will Travel: Address Workplace Blind Spots Before It's Too Late

An Emerging HR Tech Category

Skills taxonomy technology is still in its infancy, but there are already options to choose from. The key is choosing a solution that fits the needs of the business. 

A growing list of companies are investing in the area, including LinkedIn and Microsoft and learning technology providers Coursera, Udemy, Degreed and Cornerstone.

Workday is one enterprise software company with an option with its Skills Cloud. Launched in 2018 based on technology from Identified (which the company acquired in 2014), the Skills Cloud feature identifies the skills and experiences used by the workforce and arranges them into an ontology that dynamically updates to support recruiting, training and promotion efforts. As of September 2021, 1,000 Workday customers were using Skills Cloud in their talent management efforts.

Several emerging start-ups, including Huneety, Ibbaka and Neobrain, are also building skills taxonomy solutions. All of them use artificial intelligence and machine learning to make skill predictions based on internal company data, industry data, job descriptions and workforce trends.

Companies can use the results to inform all of their talent management decision-making. “It’s not just about rethinking who gets hired,” Forth said. “It’s about where to invest in talent management to make the biggest impact.”

Related Article: In Talent Acquisition, the Future Holds More AI

Where to Start with Skills Technology

Even with a workplace skills tech platform, the idea of creating a living breathing taxonomy that informs every talent decision can feel overwhelming. The key is to start small, choose a team or role that is high value and needs to be retained, and build a skills taxonomy pilot project around them. Then, use the data collected to build a talent management plan that includes hiring, training and promotion opportunities.

“Pick a talent challenge to solve that you know would add value,” Forth said.

And while skills taxonomy technology is still relatively new, if these platforms work, it will help companies fully transition to a skills-based economy, where people are judged based on what they can do in the future, not just what they have accomplished in the past.

“We are at the cusp of everything changing,” Mueller said. 

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