The Rise of the Skills-Based Organisation| Aon Insights Series UK

May 31, 2024 5 mins

The Rise of the Skills-Based Organisation

Today's employers need to continually learn and adapt to emerging technologies and skills if they are to thrive in the talent landscape.

The head of reward at one of our clients said something at our last meeting that really struck me: “We have always paid for skills — we just didn’t call it that.”

That rang very true and you only have to look back at history to find several examples where organisations have paid over the odds to attract and retain talent. This is going back a bit, but think about Genghis Khan’s Mongol horde. The Horse Archer was able to earn much more money than any other soldier in the horde based on his ability to shoot an arrow backwards while riding a horse.

In today's world maybe the software developer with Artificial Intelligence (AI) skills is the modern equivalent of the Horse Archer. They are able to create more value than a non-AI developer. Just as the Mongolians used new tactics to conquer new territories, today's employers need to continually learn and adapt to emerging technologies and skills if they are to thrive in the current (and future) talent landscape.

While skills may not be new, our ability to use them at a level where we can drive actionable insight beyond the job family certainly are. For example, five years ago organisations realised that they needed to be more data-driven and that they needed data Centres of Excellence (COEs) where all the data expertise was concentrated within a few highly skilled teams.

Now, the skills-based organisation sets out to do something revolutionary versus the COE model. Using the same example of data, a skills-based organisation sets out to build data skills in everyone with an interest, skills adjacency or potentially a role requirement around it. Now it’s not just the COE that’s data-savvy but, thanks to knowledge being shared across the workforce, the entire organisation.

Take the example of AI. So that an organisation can truly drive exponential change and seize the competitive advantage we all believe AI will bring, should it hire a Chief AI Officer with a small team of highly skilled individuals? Or does it require cultivating a basic level of knowledge across a spectrum of the workforce, enabling the rule of many in order to realise this change?

Related Capabilities

Whatever budget you might set up for the skills journey, put the same amount aside for change management. And some IT resources to help get your system going.

Ranko Kunzemann

HR Center of Expertise Consultant – Dow Chemicals

Another important aspect of the skills-based organisation is creating fungibility across the workforce. We all want to have the ability to redeploy resources at a moment’s notice to areas of high demand. Recent cost pressures driven by high inflation have only added to this need. Skills intelligence across the workforce provides the foundation but a skills-based organisation can only be achieved with structure.

An organisation will need to create a common language around skills so that its technology team and the finance department can cross-compare the type of skills they have and understand if the finance analyst in an obsolete division has the necessary pre-requisite skills to be redeployed into a high demand software developer role. Being agile as an organisation is just as much about structure as it is about methodology. You need structure, processes and rules for an agile organisation to succeed. The same goes for the skills-based organisation of tomorrow.

Let’s go back to our AI problem. At Aon we monitor labour market trends — just one of the data sources that we use to help our clients make better people decisions. And what stands out is that more and more organisations are looking for AI skills, which brings to mind a quote from a Forbes article that states “AI won’t take jobs, but people who use AI will take jobs from those who don’t" – and our analysis is really starting to evidence this. For example, we have seen job ads for software engineer roles that require AI skills quadruple over the last year — and at previously never seen price points. For research scientists, it nearly doubled with a similar pay impact.

That means two things:

AI skills are entering our workforces faster than ever before
AI skills are breaking all sorts of records on the premium that they come with

Are we doing anything to prepare for AI? We need to understand how it will impact workforces, roles and individuals within those roles.

Ranko Kunzemann

HR Center of Expertise Consultant – Dow Chemicals

Those two things together present an interesting challenge to those of us in Human Resources — if we bet the house on something, we better get it right. The rule of many we need to solve for, fungibility is a byproduct of structure and if we get both these right any external shock to our eco-system, either positive or negative, should not faze us anymore.

The skills-based organisation with the right structure in place can be confident that tomorrow (while different from today) is just “another” tomorrow and it can evolve and change whatever the future holds.

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