Over the past five years, the topic of skills has emerged as a key trend in HR strategies. Organizations are starting to see how crucial it is to understand and use skills effectively to ensure they have the talent they need to be successful. A skills-based approach can truly revolutionize workforce management, boost productivity, and drive business success. But it’s important to remember that there’s no one-size-fits-all solution. Every organization will have its own path to integrating skills into its HR practices, shaped by its industry, culture, and specific needs.
At SAP SuccessFactors, our HR research scientists have conducted five years of research to understand how skills can be effectively incorporated into HR strategies. After speaking with 278 HR leaders and surveying 9,432 global employees and managers, we’ve identified four key strategies to integrate skills into your people practices to become a skills-focused organization. Let’s explore these approaches and the technologies that can support them.
1. Skills-Implied Approach
In a skills-implied approach, organizations use traditional criteria like candidates’ or employees’ previous job titles, educational background, and past experience to make decisions instead of using skills data. Here, work is centered around job roles, and decisions about hiring and pay are based on job titles and levels. Learning and development is tailored to current roles, and promotions follow standard paths tied to credentials and tenure. Workforce planning tends to focus on short-term headcount needs, with minimal use of skills data for deeper analysis.
This approach is best for roles requiring specific certifications or highly specialized skills that are either externally regulated or require extensive training, such as lawyers, certified public accountants, and pilots.
In terms of tools and technology, job architectures can help clarify roles and align jobs based on the type of work performed. For example, the job profile builder in SAP SuccessFactors solutions helps manage job elements such as descriptions, experiences, qualifications, skills, competencies, behaviors, education, and certifications. It can offer a flexible, intuitive way to identify and share job description components across an organization.
2. Skills-Included Approach
In a skills-included approach, work is organized around job roles with an emphasis on a few key technical skills. Hiring focuses mostly on traditional criteria like education but includes some skills assessment as well. Pay is generally based on job title and level, though skills might impact bonuses. Learning and development targets skills that are crucial for current or future roles. While skills are considered in workforce planning and reported in broad terms, they’re not connected with other data sources for deeper insights.
This works best for roles where required skills remain mostly consistent, but the prioritization and application of those skills evolve over time, as in, for example, sales and people management.
Recruiters can use AI-enabled recruiting tools to consider an applicant’s technical and professional skills during the hiring process. For example, the SAP SuccessFactors Recruiting solution’s AI-assisted applicant screening can provide a skills compatibility score, allowing recruiters to view how well an applicant’s skills match job requirements. Candidate profiles include details on exact skills matches, additional relevant skills, potential skills, and missing skills to help recruiters quickly and effectively screen the best applicants.
Learning management systems can support targeted skill development for current roles. SAP SuccessFactors Learning, for example, can offer AI-driven learning recommendations and a dynamic search feature that filters by criteria such as duration, mobile availability, and specific skills. This helps promote continuous learning and can guide employees in developing skills for advanced proficiency levels. Additionally, SAP Content Stream applications by Skillsoft offer over 1,250 expertly curated learning paths aligned with high-demand skills and competencies. These include areas like AI and generative AI, cybersecurity, data management, leadership, first-time management, and performance and culture. Learners can refine their skills through various methods, including reading, watching, listening, and active practice.
3. Skills-Led Approach
In a skills-led approach, jobs are defined by a mix of technical and professional skills. Hiring looks at a range of skills, along with traditional criteria. Pay is linked to both the skills employees bring to the table and their performance. Learning and development is customized based on skills data and personal interests, helping to create personalized plans and internal mobility opportunities. Workforce planning becomes strategic, focusing on closing gaps between current and needed skills, and skills analytics are used to dive deep into skill levels and how they connect with other data.
This is best for roles where critical skills are specific or uncommon but proficiency can be inferred from adjacent skills, such as in marketing and operations.
Thinking about tools and technology, skills platforms can be useful to support this approach by tracking and analyzing skills across the workforce. The SAP SuccessFactors talent intelligence hub, for example, uses an AI-driven framework to integrate skills data from multiple sources, enabling organizations to make data-driven talent decisions. In addition, learning platforms provide development opportunities tailored to individual skills and career goals. For example, SAP SuccessFactors Learning offers AI-driven recommendations and peer suggestions for personalized learning. Skills tagging and the search for skills help to foster a habit of curiosity and a culture of continuous learning. Additionally, talent marketplaces like SAP SuccessFactors Opportunity Marketplace can offer experiential learning opportunities through AI-driven suggestions for mentors, short-term assignments, dynamic teams, and job openings.
4. Skills-Based Approach
In a skills-based approach, jobs do not exist – instead, work is organized entirely around the skills required to complete it. Hiring is all about evaluating skills instead of sticking to traditional criteria. Pay is tied to the skills employees currently have, with bonuses for skills that will be valuable in the future. Learning and development focuses on preparing for future skill needs, and internal mobility is driven by moving employees where their skills are most needed. Workforce planning is strategic, looking ahead to forecast what skills will be needed, and skills analytics keep track of trends and how skills connect with other business data.
This works for roles that rely more heavily on technical skills, roles that use certain tools or processes that are common across organizations or industries, and roles where skills can be gained outside of an educational setting, like HR, IT, and finance.
Integrated talent management platforms take care of all aspects of skills development and deployment in this approach. With SAP SuccessFactors solutions, organizations can use an AI-driven, unified skills model that covers everything from recruiting to learning, performance, and succession planning. The SAP SuccessFactors talent intelligence hub helps organizations get a clear view of their workforce by linking individual skills, strengths, and preferences with the right people and experiences across the platform. This can make managing skills throughout the employee lifecycle much easier and more effective.
As organizations work to weave skills into their HR strategies, understanding these four approaches can help them create a skills-based plan that fits their unique needs and goals. Whether you’re starting with a skills-implied approach for specialized roles or aiming for a skills-based framework for more dynamic functions, the key is to align the strategy with your organization’s specific context and objectives.
By exploring these approaches and using the right tools and technologies, organizations can build people practices that boost efficiency, transparency, and overall success. Finding the right mix and approach for your specific needs is key to unlocking the full potential of skills-based management.
Read the full report to dive deeper into our skills research. Want to see how focusing on skills can unlock an organization’s potential? Learn about Erie Insurance’s journey to becoming a skills-based organization.