Understanding Skills Taxonomy: A guide for businesses

In the rapidly evolving job market, hiring the right people is becoming an increasingly complex task. Traditional methods of assessing candidates, such as years of experience, often fall short in accurately predicting whether a candidate possesses the core competencies required for a job. According to the 2023 Workplace Learning Report, skill sets for jobs have changed by about 25% since 2015, and this number is expected to double by 2027. To bridge the gap between the skills hiring managers seek and the skills candidates offer, organisations need to develop a skills taxonomy for each role.

To delve deeper into this topic, we recently hosted a Coffee Mornings session titled “Understanding skills taxonomy: A guide for businesses”. In this insightful discussion, industry experts shed light on the concept of skills taxonomy, its significance in the current business scenario, and how it can shape the future of work. The video of this session, which you can watch below, provides a comprehensive understanding of skills taxonomy and its practical applications in business.

Understanding Skills Taxonomy

Skills taxonomies are comprehensive inventories of skill sets that are relevant to your organisation and industry. They encompass all types of skills, both hard and soft. Hard skills are specific, teachable abilities that are job-specific, such as proficiency in a foreign language, marketing expertise, or technical skills like Power BI. Soft skills, on the other hand, are interpersonal or people skills, like communication, leadership, and teamwork, that are transferable across various jobs and industries.

Robbie simplifies the complex term while discussing it in the Coffee Mornings episode:

“Effectively, it’s grouping job titles into their actual skill sets, and then go deeper; so, break that down into job titles break the job titles down into the actual skills that you need in that function.” – Robbie Blake, Senior Recruitment Consultant

A skills taxonomy offers a skills-based approach to identifying, acquiring, and managing the core competencies that make your business successful. It provides a structured framework that enables organisations to understand the specific skills they need to thrive in their industry. This understanding is crucial in today’s rapidly evolving business landscape. According to the 2023 Workplace Learning Report, skill sets for jobs have changed by about 25% since 2015, and this number is expected to double by 2027.

During our recent Coffee Morning session, industry experts discussed the importance of skills taxonomy in the current business scenario. They highlighted how it allows businesses to shift their focus from hiring based on job titles or years of experience to hiring based on specific skill sets. This shift is not just a trend but a necessity in the modern workplace, where the nature of work is constantly changing due to technological advancements and evolving business needs.

Furthermore, a well-defined skills taxonomy can guide strategic decisions about workforce development, including upskilling and reskilling initiatives. It can help identify skills gaps within the organisation and highlight areas where training and development efforts should be focused. This is particularly important considering that nearly nine out of ten (89%) of learning and development (L&D) professionals agree that keeping track of skills data to proactively upskill and reskill current employees is essential to successfully navigating the evolving future of work.

In essence, understanding and implementing a skills taxonomy is not just about staying relevant. It’s about future-proofing your organisation and ensuring its continued success in the face of rapid change. As our panelists emphasised during the Coffee Morning session, it’s time for businesses to take skills taxonomy seriously and start implementing it now. The future of work is already here, and only those businesses that are prepared will thrive.

The Importance of Skills Taxonomy

The significance of maintaining an updated skills taxonomy for each role in your organisation cannot be overstated. It serves as a roadmap, helping you understand exactly what each role requires in terms of hard and soft skills. More importantly, it allows you to identify where your organisation’s skills gaps may lie.

In our recent Coffee Morning session, our panel of experts highlighted how skills taxonomies simplify the process of writing accurate job descriptions and finding qualified candidates. Instead of focusing on job titles or years of experience, hiring managers can concentrate on the specific skills required for the role. This shift towards a skills-based approach to hiring is a game-changer in today’s dynamic job market.

As Sam is seen quoting –

“So maybe it’s always like thinking you’re looking at the skills before the person.”- Sam Ingram, CEO

But the benefits of skills taxonomy extend beyond hiring. It also provides a concrete, skills-based approach to upskilling and reskilling programs. By identifying the skills gaps within your organisation, you can create targeted development programs that address these gaps. This is particularly crucial in today’s rapidly evolving business landscape. According to the 2023 Workplace Learning Report, skill sets for jobs have changed by about 25% since 2015, and this number is expected to double by 2027.

As the skill sets required for many jobs continue to change, skills taxonomies will only become more important. In fact, nearly nine out of ten (89%) of learning and development (L&D) professionals agree that keeping track of skills data to proactively upskill and reskill current employees is essential to successfully navigating the evolving future of work.

During our Coffee Morning session, the panelists emphasised the urgency of implementing skills taxonomy. They noted that it’s not just about staying relevant in the current job market, but about future-proofing your organisation. As businesses brace for the future of work, the importance of skills taxonomy will only continue to grow. It’s time for businesses to take skills taxonomy seriously and start implementing it now. The future of work is already here, and only those businesses that are prepared will thrive.

Benefits of Implementing a Skills Taxonomy

The implementation of a skills taxonomy for each role in your organisation brings a multitude of benefits, as discussed in our recent Coffee Morning session. Here are some of the key advantages:

1. More accurate assessments of job-candidate suitability: A skills taxonomy allows hiring managers to focus on the specific skills required for a role, leading to more accurate assessments of a candidate’s suitability. This approach can significantly improve the quality of hires and reduce the time and cost associated with hiring.
2. More aligned and strategic reskilling and upskilling programs for each role: Identifying the distinct skills necessary for each role, along with recognising the skills gaps within an organisation, is key to creating effective upskilling and reskilling programs. We have consistently highlighted the importance of such investments for businesses, emphasising their significant positive effects on employee retention and their crucial role in combating skills gaps. Not only does this approach future-proof a business, but it also contributes to a more capable workforce. However, it’s noticeable from panel discussions that only a handful of businesses commit to learning and development (L&D) investments. Phil, astutely put it as,

“If you’ve got the time to hire them, you’ve got the time to develop them.” – Phil Rose, Director-Biotech

This encapsulates the essence of the matter. The role of skills taxonomy cannot be overemphasised in this context. It not only bolsters the effectiveness of upskilling and reskilling programs but also guarantees their alignment with the strategic objectives of the organisation. And that is the way forward.

3. Heightened transparency and clarity around internal mobility plans for each employee: A skills taxonomy provides a clear framework for understanding the skills required for each role. This can help employees understand the skills they need to develop to advance in their careers, thereby promoting transparency and clarity around internal mobility plans.
4. More intentional workforce planning: With a clear understanding of the skills required for each role, businesses can make more informed decisions about workforce planning. This can lead to more efficient allocation of resources, better succession planning, and improved readiness for future business challenges.
5. Reduced systemic bias by introducing objective guardrails on performance reviews and promotions: A skills-based approach can help reduce systemic bias in performance reviews and promotions. By focusing on the specific skills an employee has, rather than subjective factors, businesses can ensure that performance assessments are fair and objective.
6. Improved employee engagement and retention: By providing clear career paths and opportunities for skill development, businesses can improve employee engagement and retention. Employees who see a clear path for growth and development are more likely to stay with the organisation.
7. Future-proofing the organisation: As the skill sets required for many jobs continue to change, having a robust skills taxonomy can help businesses stay ahead of the curve. By identifying emerging skills and trends, businesses can ensure they are prepared for the future of work.

In conclusion, implementing a skills taxonomy is not just a strategic move; it’s a necessity in today’s rapidly evolving business landscape. The benefits are clear, and as our panelists emphasised, it’s time for businesses to act and start implementing skills taxonomy now.

Building a Skills Taxonomy Framework

Building a skills taxonomy framework for any given position may seem like a daunting task, but with the right methodology, it can be surprisingly straightforward. As discussed in our recent Coffee Morning session, the process involves several key steps:

1. Cataloguing the skills necessary for the role: The first step in building a skills taxonomy is to identify and catalogue the skills necessary for each role. This includes both hard and soft skills. Hard skills are specific, teachable abilities that are job-specific, while soft skills are interpersonal or people skills that are transferable across various jobs and industries.
2. Determining skills clusters within main skill categories: Once the skills have been catalogued, the next step is to group them into clusters within main skill categories. This helps to create a structured framework that can be easily understood and navigated.
3. Visualising the skills taxonomy as a skills inventory hierarchy and prioritising: The final step is to visualise the skills taxonomy as a skills inventory hierarchy. This involves ranking the skills in order of importance or relevance to the role. This visual representation can help both hiring managers and employees understand the skills required for each role and the relative importance of each skill.

This methodology can help create skills taxonomies for your entire workforce, aiding in creating career paths for employees who are looking to grow their careers and learn new skills at your company. According to the 2023 Workplace Learning Report, nearly nine out of ten (89%) of learning and development (L&D) professionals agree that keeping track of skills data to proactively upskill and reskill current employees is essential to successfully navigating the evolving future of work.

During our Coffee Morning session, the panelists emphasised the importance of regularly updating and refining the skills taxonomy to reflect changes in the business environment and the skills needed by your workforce. They also highlighted the role of technology in creating and managing a skills taxonomy, with various software and tools available that can provide precompiled lists of skills, organise the skills into groups and skill sets, and provide insights into skill-related needs.

In conclusion, building a skills taxonomy framework is a crucial step in future-proofing your organisation. It not only helps in hiring and workforce development but also plays a key role in employee engagement and retention. As our panelists emphasised, it’s time for businesses to take action and start building their skills taxonomy now. The future of work is already here, and only those businesses that are prepared will thrive.

Implementing a Skills Taxonomy

Here’s a step-by-step guide to building a skills taxonomy:

• Identify the skills needed: Start by identifying the skills and competencies required for each role in your organisation. This should include both hard skills (specific, teachable abilities) and soft skills (interpersonal skills and attributes).
• Group and cluster skills: Once you’ve identified the skills needed, group and cluster them at the organisational and employee level. This will help you to understand the capabilities of your business in a quantifiable way.
• Create a skills framework: Develop a clear skills framework that can serve as the backbone of a data-driven learning strategy. This should include a common language for talking about skills and a structure for understanding how different skills relate to each other and to the needs of the business.
• Conduct a skills gap analysis: Use your skills taxonomy to conduct a skills gap analysis. This will help you to identify where there are shortages of key skills within your workforce and where training and development efforts need to be focused.
• Implement and refine: Implement your skills taxonomy and use it to guide your recruitment, training, and development efforts. Regularly review and refine your skills taxonomy to ensure that it remains relevant and useful.
• Leverage technology: There are various software and tools available that can help in creating and managing a skills taxonomy. These tools can provide precompiled lists of skills, organise the skills into groups and skill sets, and provide insights into skill-related needs.

Remember, creating a skills taxonomy is not a one-time task. It needs to be regularly updated and refined to reflect changes in the business environment and the skills needed by your workforce.

Current practices and future implications

In the present scenario, the application of skills taxonomy is still in its nascent stages, as observed by our panel during the discussion. Our clients, who span various industries, have begun to recognise its potential, but the practice of skills-based hiring is still a rarity. Traditional hiring methods, which often prioritise job titles and years of experience, continue to dominate. However, our panelists noted that a shift is beginning to occur, with more organisations starting to appreciate the value of understanding the specific skills that a role requires.

“Have we seen anyone hire like this?” – Sam Ingram, CEO

“I’ve seen people recruit for it in this way and say, well, OK, what skills do we need in business? In real life and how do we kind of then use that in the right way but in terms of actually managing it on a day-to-day and kind of using it, you’ve you know you have like psychometric testing and what like there’s one that’s like a you’re a red person, which means you’re more creative and a blue might be. Kind of more like the psychometric testing side of things but they tend to be more personality. But in terms of actual skills overall in terms of like hard skills as well as people skills, no at least I haven’t.” – Robbie Blake, Senior Recruitment Consultant

“There’s more of a focus on just this job description or job type that was held in previous industry experience over just a specific face. Hiring isn’t that and that’s certain of our clients and the finance industry, I don’t think I’ve ever seen it where a client will look specifically, just for a certain skill set or group of skill sets.” – Tori Wheatley, Recruitment Consultant

Looking towards the future, the panelists agreed that skills taxonomy is set to reshape the way we work significantly. As businesses become more project-based and roles become more fluid, the focus will shift from hiring for specific job titles to hiring for specific skill sets. This shift will allow organisations to assemble dynamic, cross-functional teams that can adapt to the changing needs of the business.

Moreover, skills taxonomy will play a crucial role in workforce development. By identifying the skills gaps within their teams, organisations can create targeted upskilling and reskilling programs. This approach will not only help employees grow and adapt to their roles but will also ensure that the organisation as a whole can keep pace with the rapidly evolving business landscape.

In essence, while the adoption of skills taxonomy is currently limited, its potential to transform hiring practices and workforce development is immense. As more organisations begin to recognise this, we can expect to see a significant shift towards skills-based approaches in the future.

Takeaway

As we conclude our exploration of skills taxonomy, it’s important to reflect on the actionable advice shared by our panel during the Coffee Morning session. When Sam asked his fellow panelists for their key recommendations for businesses, they beautifully summed it up in three simple words: “Just do it.”

“Skill Taxonomy do it. That’s all.” – Phil Rose, Director – Biotech

“Oh God, I can’t follow that well. Yeah, he. He put it so concisely, it was perfect. Yeah, just do it.” – Tori Wheatley, Recruitment Consultant

“Just keep doing it.” – Robbie Blake, Senior Consultant

This succinct advice encapsulates the urgency and importance of implementing a skills taxonomy in today’s dynamic business environment. It’s not just about understanding the concept or recognising its potential benefits. The real value lies in taking action, in making the shift from traditional hiring practices to a skills-based approach.

The talent war is intensifying, and businesses need to arm themselves with the right strategies to attract, retain, and develop the best talent. Skills taxonomy offers a powerful tool in this endeavour. By identifying the specific skills required for each role, businesses can make more informed hiring decisions, create targeted development programs, and build a workforce that’s ready to meet the challenges of the future.

In essence, the time for contemplation is over. It’s time for action. It’s time for businesses to take skills taxonomy seriously and start implementing it now. The future of work is already here, and only those businesses that are prepared will thrive. So, in the words of our panel, “Just do it.”

Need help mapping your Skills Taxonomy or want to practice skill-based hiring? We’d be glad to help. Contact us today.