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How to Transition from a Job-Based to a Skill-Based Organization

The way we work is changing quickly because of technology and automation, making it essential for organizations to adopt a skills-based approach. The report notes that “in a skills-based approach, a workforce’s capabilities are defined and described by the specific skills required to perform individual jobs.” (McKinsey, 2022) 


In this article, we will explore what skill-based organizations are, their benefits, and how to transition from a job-based to a skill-based organization. We will also discuss how L&D managers can use an LMS platform to help transform their organization and help employees develop skills on the job.

What are Skills-Based Organizations?

A skills-based organization is one that values skills over job titles or roles. It focuses on the skills employees have and how they can use those skills to contribute to the organization’s goals. In a skills-based organization, employees are not limited to their job description or role, but instead, they can use their skills to take on different projects and responsibilities. 

What are the Benefits of Skills-Based Organizations?

A skill-based approach makes employees faster and more agile. In simpler terms, it means following a hiring and upskilling process that helps organizations hire and move people to roles that will 1. Help the company consistently grow and 2. Make sure team members develop the skills needed to meet company goals. 

Deloitte (2022) reported that organizations that adopt a skills-based approach are 107% more likely to match new hires with responsibilities. Furthermore, a significant percentage (77%) of business and HR executives consider the ability to flexibly move skills to work as a critical factor in navigating future disruptions. In summary, a skill-based hiring and training model can lead to:

Increased agility

Skills-based organizations quickly adapt to changes, making them more agile and responsive.

Better employee engagement

Employees in skills-based organizations are more engaged because they feel valued for their skills and what they bring to the table, not just their job title.

Improved retention

Employees are more likely to stay with an organization that values their skills and gives them opportunities to grow and use them.

Increased productivity

Employees are more productive when they are using their skills to help a company meet its goals.

Improved innovation

Skills-based organizations are more innovative because employees are encouraged to use their skills to develop new ideas and solutions.

How to transform from a Job-Based to Skill-Based organization?

Transitioning to a skill-based organization is not easy, but it is necessary to keep up in today’s business world. Here are some steps to follow to make the transition:

1. Conduct a skills assessment

The first step in transitioning to a skill-based organization is to conduct a thorough skills assessment. This involves identifying the skills needed for the organization to grow.

The assessment should include technical and soft skills and be based on the organization’s present and future needs. It also needs to include employees to make sure it reflects the skills required for each role within the organization.

2. Develop a skills framework

Once the skills assessment is done, the next step is to develop a skills framework. This framework should outline the skills needed for each role within the organization, be based on the results of the skills assessment and be flexible enough to adapt to changes in the organization’s needs. The framework should also include a way to test employee skills and abilty.

3. Create a skills database

The skills database should be a centralized repository that contains information about employee skills and competencies. This database should be easily accessible to all employees, and it should be updated regularly. The database should include information about each employee’s skills, competencies, and training history. This information can be used to identify skill gaps and to develop targeted training programs to address them.

4. Develop a skills-based training program

Organizations need to develop a skills-based training program to ensure that employees have the skills necessary to do well in their jobs. 

5. Evaluate and adjust

As with any new approach, it is important to question the impact of a skill-based approach regularly. This means measuring the effectiveness of the approach and making necessary adjustments to keep it in line with company goals. It is also important to ask employees what they think to ensure that the approach is also meeting their needs.


Transitioning to a skill-based organization is a complex journey that requires a significant investment of time and resources. However, the benefits of a skill-based approach can be significant, including increased agility, improved employee engagement, and reduced turnover. 


An LMS platform can also help HR and L&D departments simplify the skills assessment process, create skill databases, develop targeted training programs, and track employee skill development. To learn more about how to make this transition, reach out to our training experts to see how our LMS can support you in this transition. 


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