For decades, job descriptions have been the cornerstone of recruitment, outlining the responsibilities and requirements for a specific role. But in today’s skills-oriented talent market, traditional job descriptions are proving increasingly inadequate, failing to capture the nuances of skills and potential, leading to missed opportunities and mismatched hires.

In fact, the global skills mismatch is a growing problem across industries, with the World Economic Forum expecting that 44% of the current skills of the workforce will be disrupted in the next five years. Recruiters, frontliners in the evolving talent market, are now forced to make strategic changes to put more emphasis on a skills-based approach to talent acquisition and retention.

Some companies have actually begun adopting skills-based models in their recruitment process. As early as 2022, Unilever has shifted its perspective, looking at each role in the company as an inventory of skills instead of just simply job titles. A Deloitte study found that companies using skills-based models like Unilever are 107% more likely to place talent effectively and 98% more likely to retain high performers.

But what exactly is a skill inventory and how can it help people managers navigate the next few years of changes in the talent market?

What is a skill inventory?

A skill inventory is a centralised repository or database that catalogues the skills, knowledge, and abilities of an organisation's workforce. Think of it as a dynamic snapshot of your internal talent pool. It goes beyond just listing job titles and provides a granular view of the competencies each employee possesses.

These competencies can range from technical skills (like coding languages or software proficiency) to soft skills (communication, leadership, problem-solving) and even cognitive abilities (critical thinking, decision-making). This comprehensive overview allows organisations to gain a deep understanding of their human capital. Instead of relying on potentially outdated or incomplete job descriptions, a skill inventory provides a real-time, searchable record of the talent available within the company.

But why is this so valuable? Skill inventories offer a significant advantage over traditional job descriptions by enabling a skills-based hiring approach. This means focusing on the specific skills and competencies needed for a role, rather than relying solely on job titles or degrees. Here's how this benefits your organisation:

Improved quality of hire. When you have a clear picture of the skills needed and the skills available within your workforce, you can make more informed hiring decisions. Skill inventories help you identify candidates who possess the precise skills required for success, even if their background doesn’t perfectly align with a traditional job description. This leads to better matches, higher performance, and reduced turnover.

Enhanced talent acquisition. A skill inventory broadens your talent pool. You can identify hidden gems within your organisation or source candidates with non-traditional backgrounds who might have been overlooked using conventional methods. This is particularly crucial in today’s competitive talent market.

Increased internal mobility. Skill inventories facilitate internal mobility and career development. Employees can see the skills needed for different roles and identify opportunities for advancement. This promotes employee engagement, retention, and a culture of continuous learning.

Data-driven workforce planning. By analysing the data in your skill inventory, you can identify existing skill gaps and anticipate future needs. This allows for proactive workforce planning, including targeted training programmes, reskilling initiatives, and strategic hiring to address potential shortages.

Agility and adaptability. In a constantly changing business environment, organisations need to be agile. Skill inventories provide the flexibility to quickly adapt to new challenges and opportunities. When priorities shift or new projects arise, you can readily identify the individuals with the necessary skills to contribute effectively.

How to develop a comprehensive skill inventory

Building a comprehensive skill inventory requires a systematic approach. Here's a step-by-step guide to get you started:

Define your objectives. What do you hope to achieve with your skill inventory? Are you primarily focused on recruitment, internal mobility, or workforce planning? Clearly defined objectives will guide your efforts and ensure your inventory aligns with your organisational goals.

Identify key skills. Determine the essential skills and competencies that are critical for success in your organisation, both now and in the future. Consider technical skills, soft skills, leadership qualities, and any specialised knowledge relevant to your industry. You can use existing job descriptions, industry frameworks, and competency models as a starting point, but be prepared to go beyond these to capture the full range of skills needed in a dynamic work environment.

Choose a skills framework. A standardised skills framework provides a consistent structure for categorising and evaluating skills. There are various frameworks available, such as O*NET, ESCO, and SHRM's competency model. Choose a framework that aligns with your industry and organisational needs.

Collect and analyse employee data. Gather information about your employees' skills through various methods, such as self-assessments, manager reviews, skills tests, and performance reviews. Use a tool of your choice to consolidate and organise all datasets so you can check trends, patterns, and other pertinent information relevant to your talent goals. Use HR systems that integrate seamlessly with all the other tools you use.

Maintain and update. A skill inventory is not a one-time project. It needs to be regularly updated to reflect changes in employee skills, new roles, and evolving business needs. Encourage employees to update their profiles and provide ongoing feedback.

The power of a skills-based approach to talent

A skills-based approach, powered by comprehensive skill inventories, fosters agility in several ways. When priorities shift or new projects emerge, you can quickly identify employees with the necessary skills, regardless of their current roles. This allows for rapid redeployment and efficient resource allocation.

By proactively identifying skill gaps, you can implement targeted training and development programmes, ensuring your workforce possesses the competencies needed to meet future demands. And when skills are the focus, employees are empowered to contribute their expertise across different projects and teams, fostering cross-functional collaboration and driving innovation.

A skills-based approach not only benefits the organisation but also empowers individual employees. With a renewed mindset, employees gain a clear understanding of the skills valued by the organisation and how their own skills contribute to its success. This fosters a sense of ownership and motivates them to develop their abilities further.

Skill inventories provide transparency into the skills required for various roles, enabling employees to identify career paths and pursue opportunities for advancement. This promotes internal mobility and career growth. Moreover, when employees feel their skills are recognised and utilised effectively, they experience greater job satisfaction and are more likely to stay with the organisation.

In a world of constant technological disruption and evolving skill requirements, a skills-based approach future-proofs your organisation. By prioritising skills over traditional credentials, you can attract a wider pool of qualified candidates, including those with non-traditional backgrounds who may bring fresh perspectives and innovative ideas.

A focus on skills also encourages continuous learning and development, ensuring your workforce remains adaptable and equipped to handle the challenges of the future. Organisations that embrace a skills-based approach are better positioned to adapt to change, innovate, and outperform their competitors in the long run.

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