Building a skill-based organization: Adapting to evolving work and workforce dynamics

The nature of work and the expectations of the workforce are shifting at an unprecedented pace. Organizations are increasingly finding that traditional hierarchies and job descriptions are no longer sufficient to meet the demands of an agile and diverse workforce. As businesses navigate the challenges posed by technological advancements, globalization, and evolving employee aspirations, the necessity for building a skill-based organization is becoming essential. A skills-based approach focuses on the competencies and capabilities that employees bring to the table, enabling organizations to harness talent effectively and adapt swiftly to market changes.

But what are the driving forces behind the move toward skills-based organizations? And how can businesses successfully transition to this model?

This shift is critical as organizations strive to remain competitive while meeting the diverse needs and aspirations of their workforce.

In this blog, we will explore the growing importance of skills-based organizations amid evolving work and workforce dynamics, how skill gap analysis serves as the foundation for this transition, and the actionable steps organizations can take to build a skills-based culture.

The changing nature of work

Work is no longer defined by fixed roles and job titles. Technology, automation, and AI have redefined how businesses operate, shifting focus from what a job is to what skills are needed to get the work done.

Some key drivers of this change include:

• Automation and AI: Many routine tasks are now automated, requiring employees to develop improved skills, such as problem-solving, critical thinking, and creativity.
• Project-based work: Traditional job roles are becoming less relevant as organizations move towards building cross-functional, project-based teams that require diverse skill sets.
• Industry disruptions: Market dynamics are shifting rapidly, requiring companies to build workforces that can adapt to emerging technologies and business challenges.

The changing workforce and employee expectations

Employees now prioritize career growth, flexibility, and continuous learning over traditional career paths. Millennials and Gen Z workers, who make up a significant portion of the workforce today, expect organizations to:

This shift in workforce expectations makes a strong case for skills-based organizations. They allow employees to take control of their career progression based on their abilities rather than waiting for promotions tied to outdated job requirements.

Why traditional job models are failing

Many organizations still rely on traditional role-based models, where employees are hired for specific job titles, given fixed responsibilities, and promoted based on tenure rather than skills. However, this model is ineffective in today’s business environment for several reasons:

• Rigid job roles hinder creativity: Employees get locked into predefined responsibilities, making it difficult for businesses to reallocate talent in response to new challenges.
• Skills go unrecognized and underutilized: Employees often have skills outside their job descriptions that go unnoticed because they are not part of that defined role.
• Workforce agility is compromised: Organizations struggle to upskill and redeploy talent quickly enough to meet market changes.

A skills-based approach allows organizations to tap into existing talent, reskill employees efficiently, and adapt workforce capabilities to evolving business needs.

What is skill gap analysis?

Skill gap analysis is an approach to identifying the difference between the skills an organization’s employees currently have and the skills they need to achieve future business goals. This process helps businesses make data-driven decisions on reskilling, upskilling, and hiring.

A well-executed skill gap analysis enables organizations to:

• Identify existing workforce strengths and weaknesses
• Align talent strategy with business goals
• Develop targeted learning and development programs
• Improve workforce planning by ensuring the right skills are in place

Mercer | Mettl’s Skills Gap Analysis tool enables organizations to build targeted reskilling plans for each employee. By identifying the specific skills that are currently lacking and those needed for both present and future roles, organizations can invest in the appropriate training initiatives. This strategic approach enhances employee capabilities and ensures that the workforce is well-equipped to meet evolving business demands, leading to improved returns on training investments. Aligning employee development with organizational goals empowers companies to effectively bridge the skills gap and foster a competent, adaptable workforce.

How to conduct a skill gap analysis

A systematic approach to skill gap analysis includes the following steps:

Define organizational goals

The first step is to align workforce skills with business strategy.

Questions to ask include:

• What are the organization’s long-term objectives?
• What new technologies or processes will be introduced?
• What future skills will be critical for success?

For example, a company expanding into AI-driven products may need more data scientists and AI specialists than software developers.

Identify key skills

Once business objectives are clear, organizations must define the key skills required to achieve those goals.

These can include:

• Core skills (Leadership, critical thinking, collaboration)
• Technical skills (AI, cloud computing, cybersecurity)
• Industry-specific skills (Regulatory compliance for finance)

Assess current skill levels

To measure workforce capabilities, companies can use:

• Employee self-assessments
• Manager evaluations and Mercer | Mettl’s 360-Degree Feedback
• AI-driven skill assessment tools

Analyze the gap

After assessing current capabilities, the next step is to compare them against the required skills to determine:

• Areas where employees lack the necessary skills
• Overlapping skills that can be repurposed for other roles
• Whether upskilling or external hiring is the best solution

Bridge the gap

Once gaps are identified, organizations can:

• Launch targeted training programs
• Invest in upskilling and cross-skilling employees
• Redesign hiring strategies to focus on skills rather than job titles

Building a skills-based organization requires a strategic shift in workforce management, moving away from traditional job roles to embracing a flexible, skill-centric approach.

Here are five actionable steps to make this transition:

Shift from job roles to skill portfolios

Traditional job descriptions are restrictive. Instead of hiring and promoting employees based on roles, develop skill portfolios, which are comprehensive records of an employee’s skills, certifications, and competencies.

• Implement skills-based hiring practices, where candidates are assessed based on demonstrated capabilities rather than job titles.
• Redesign job descriptions to focus on required skills rather than predefined responsibilities.
• Use AI-driven talent analytics to track employee skills in real time.

Build a skills inventory across the organization

Understanding the existing skill sets within the workforce is essential for effective workforce planning.

Organizations can:

• Conduct organization-wide skills assessments using AI-powered tools.
• Encourage employees to self-report their skills and interests to create a dynamic skills database.
• Use skill inventories to map internal talent and identify potential reskilling opportunities.

Integrate talent development with business strategy

A skills-based organization must prioritize continuous learning. Instead of traditional training programs, organizations should adopt:

• Personalized learning paths aligned with employees’ career aspirations.
• Microlearning modules to help employees acquire new skills in real time.
• Collaborative learning environments, where employees can mentor and train one another.

Enable internal career mobility

Rigid career paths limit employee growth. Organizations should:

• Encourage internal mobility, allowing employees to move across departments based on skills.
• Establish mentorship programs to facilitate skill-sharing between employees.
• Reward employees who proactively upskill by providing career advancement opportunities.

Use data to continuously update workforce planning

The skills required today may become obsolete tomorrow. Organizations must:

• Continuously track evolving skill trends using AI and workforce analytics.
• Conduct regular skill gap analyses to ensure employees remain equipped for the future.
• Adapt hiring and training strategies based on real-time business needs.

Telkom, Indonesia’s state-owned telecommunications enterprise, embarked on a significant digital transformation journey in 2020, introducing three new business portfolios to adapt to rapidly evolving technologies and customer preferences. This initiative highlighted the urgent need for digital upskilling among its workforce.

Business challenge

As Telkom navigated its digital transformation, it faced the critical decision of whether to recruit new talent or develop existing employees to meet the demands of new-age competencies. To inform this choice, the company conducted a comprehensive skills gap analysis for over 10,000 employees, benchmarking their capabilities against global standards. This analysis served as a foundation for translating the organization’s existing competency frameworks into actionable strategies, ensuring that the workforce was aligned with the evolving requirements of the telecommunications industry.

Solution

Telkom partnered with Mercer | Mettl to implement a comprehensive strategy focusing on assessing the digital readiness of its workforce.

• Digital Readiness Assessment: Evaluated employees’ preparedness for digital transformation through personality profiling and critical thinking assessments.
• Domain/technical assessments: Custom assessments for 75+ new-age roles, including data engineers and cloud engineers, to identify skill gaps and training needs.

Impact

• Over 10,000 employees were profiled for digital readiness levels, and 75+ new skills of candidates were assessed to align with emerging roles.
• Identified skill gaps for each employee, creating tailored development plans.
• Aligned workforce competencies with digital transformation goals.
• Enabled informed hiring and developmental decisions, allowing Telkom to build a future-ready workforce.

The transition to a skills-based organization is no longer optional; it is a necessity for companies looking to thrive in an era of constant change. Businesses that embrace skills over static roles will gain a competitive edge by fostering agility, innovation, and workforce resilience.

By investing in skills today, organizations can future-proof their workforce, reduce hiring costs, and unlock new opportunities for innovation and growth. The future of work belongs to businesses that recognize, develop, and empower talent based on skills and not job descriptions.