Use a Skills-Based Strategy to Address the Tech Talent Crunch

Tech leaders will be better prepared for the continual disruption of changing customer, market, work, and role requirements by implementing these five best practices.

Fiona Mark, Principal Analyst, Forrester

January 18, 2023

4 Min Read
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Technology leaders are operating in a world of uncertainty -- and, increasingly, constraint. While Forrester is still predicting that the tech market will grow, it’s clear that tech leaders will need to implement strategies that manage the downside while building upside for the eventual market rebound. As a result, organizations must become adaptive -- that is, they must infuse flexibility into their IT operating model in order to respond quickly to evolving dynamics.

The reward? Adaptive companies clearly outperform their peers -- growing nearly three times the industry average.

A key element of an adaptive tech capability is its people. The tech labor market has swung from record hiring levels, where tech workers cashed in on roles and tech companies went on hiring sprees, to a wave of high-profile layoffs, with tech workers questioning their collective futures. Regardless, tech talent remains hard to find. Relying on the solutions of yesterday are unlikely to work, so tech leaders must find new ways to deliver on the ever-changing needs of delivering on customer demands.

The old model of relying simply on jobs and roles to manage the workforce restricts an organization’s ability to react quickly to change, does not account for the speed at which the nature of work changes, and does not allow organizations to unlock the wide variety of transferable skills within their organization. A skills-based strategy means shifting from managing your workforce based on defined roles toward using capabilities and the required skills and technology required to deliver them. Hiring and talent development focus less on role-based experience but more on skills and talent. Each element can be deployed in response to shifting needs, using platforms such as talent marketplaces. The net impact is a workforce that can better react to rapidly changing customer and market conditions

Best Practices for Transitioning to a Skills-Based Strategy

Leading organizations are already taking a skills-driven approach to talent management. For example, Schneider Electric uses its AI-driven platform to match managers who require additional resources with employees who have the right skill set and the capacity to support them. To make the transition to a skills-based strategy, tech leaders must apply the following five practices:

1. Prioritize capabilities and identify key gaps. Everything that an organization delivers is based on capabilities, whether those are delivered internally or by partner organizations. Tech leaders must have a clear understanding of capability priority (i.e., how much value will this create for the business?) and maturity (i.e., how well do we do this?) in order to prioritize skills investment. This will help them identify key gaps for their organization to focus on.

2. Realign the recruitment process to capture skills. Understanding capability gaps enables tech leaders to develop the key skills needed to deliver said capabilities. Tech leaders should rethink both how their role descriptions are used to describe the skills required and their recruiting process to focus on highlighting and assessing the key skills -- both technical and human, or soft, skills -- that are key to building their priority capabilities. Use competency-based questions, case studies, and skills assessment tools, and keep an open mind about candidates who may not have the typical experience but can demonstrate relevant skills that align with your needs. These candidates may well bring new experience and perspective to your organization.

3. Develop internal marketplaces that match skills to opportunities. Many organizations such as Procter & Gamble are using talent opportunity marketplaces driven by AI to algorithmically match people with relevant skills to opportunities. These platforms not only encourage internal mobility, but they also provide hiring managers with candidates beyond their traditional network with opportunities for career development and progression.

4. Build performance objectives that encourage skill development. According to Forrester, upskilling and reskilling, particularly in the moment, is a key priority for tech leaders. For many organizations, however, team leaders are not measured or accountable for their teams’ development and progression. Therefore, learning and development activities are deprioritized in lieu of other priorities. Tech leaders should identify their skills development goals, create metrics and KPIs to measure them, and encourage managers to prioritize development by establishing goals for teams.

5. Expand learning to drive the continuous development of skills. Learning doesn’t just happen in the classroom. In fact, most learning happens in situations where we can apply “on the job” learnings as well as learnings from peers. Tech leaders should make sure that employees have both the capacity for development activities baked into their workload and the opportunities to apply new skills in a safe, controlled environment. Otherwise, their investments in training and development will not yield returns.

In shifting to a skills-based strategy, tech leaders will be better prepared against the continual disruption of changing customer, market, work, and role requirements. They will also be better positioned to unlock hidden talent in their organizations. By focusing on development, they will be better able to attract and retain tech talent, resulting in improved employee engagement. All these factors will result in increased organizational adaptivity -- an organization that not just weathers the continuous rate of change but thrives, since it can shift more quickly than its competitors.

About the Author(s)

Fiona Mark

Principal Analyst, Forrester

Fiona Mark is a principal analyst at Forrester, helping technology leaders address the challenges of leading technology organizations at a time of unprecedented change. Her research focuses on setting CTOs up for success in leading technology innovation, partnering across the organization, and delivering amazing products. Her other research interests include how diversity, inclusion, and equity are relevant to technology leaders and how technology leaders can drive more value from partnerships. A graduate of the University of Edinburgh in the United Kingdom, Fiona has over 15 years of experience in technology across a range of industries and consulting.

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