Debbie Walton: What are the key challenges organisations face in workforce planning today, especially in the context of skills-based hiring, and how can a strategic approach address these challenges?

Annelise Smith: While skills-based talent strategies can take an organisation to the next level, the most difficult part is connected to identifying the skills that currently exist in an organisation, and those that are critical to achieving business outcomes and supporting innovation. A common obstacle for companies is the limited visibility into the full spectrum of skills possessed by their workforce. Although leaders typically recognise the necessary capabilities for job performance, they may overlook competencies beyond their specific domain and the ongoing knowledge and additional skills that their employees accumulate over time.

To address this issue, numerous companies are adopting ‘skills intelligence’ tools to attain a comprehensive understanding of the diverse capabilities their employees offer and to optimise the utilisation of these skills effectively.

For skills-based hiring to be successful, you also need involvement from stakeholders across the business. Even though talent strategies fall into the category of HR responsibilities, having a blended cohort of executive sponsors, operational delivery managers, and team leads in key.

Numerous companies are adopting ‘skills intelligence’ tools to attain a comprehensive understanding of the diverse capabilities their employees

For organisations to succeed in skills based hiring and effective workforce planning, they need a well-defined strategy with a clear goal. A skills taxonomy is a good place to start when identifying the essential – current and future – skills for business success. This should capture the type of skill, the proficiency level, 360 feedback, performance reviews, for example. This strategy should also highlight the transferable skills – both existent and desirable – that can help employees advance faster or move to entirely different roles.

Partnering with a workforce solutions provider like Lorien can offer the resources and technology an organisation needs to create effective workforce planning strategies that drive real results and overcome challenges.

DW: Can you share some success stories of successful implantation of a hire, train, and deploy model to build a skilled workforce? What were the critical factors that contribute to the success of such programmes?

AS: One of our clients in North Wales faced a talent shortage issue and low diversity figures. To tackle this challenge, we came up with the solution of creating a recruit-train-deploy mechanism. We decided to hire non-skilled labour and utilise apprenticeship programmes to upskill the workforce into skilled positions. This approach allowed us to backfill the unskilled labour and improve diversity.

Another example was a clients’ desire to create a more diverse workforce, and the prevalent skill shortages in the tech sector led us to implement boot camps in the Midlands area. These boot camps are funded by the adult education budget and allow us to recruit career changers and individuals who are struggling to re-enter the job market. Through a three-month initial program, we provide an opportunity to retrain in digital skills. This programme also enables us to identify individuals who we feel can accelerate into higher digital roles and utilise the apprenticeship levy to support their growth.

 DW: In the current fast-paced business environment, how can organisations balance the need for immediate skill deployment with the importance of investing in long-term employee development and training?

AS: If your organisation has identified immediate skills gaps, it’s not always easy to fix the need through anything other than hiring, especially where there is not a long-term employee development and training plan in place. The key is to get in front of future skills demands through a robust, workforce and demand planning programme that will allow the opportunity to solve skills gaps internally through investing in current employees with development and training opportunities. This is an important aspect of talent retention and a critical component of a company’s success. By providing long term development opportunities, companies can improve their job performance and satisfaction, which ultimately boosts productivity and efficiency, reducing the risk associated with high turnover.

Investing in employee development and training can also lead to increased employee engagement, as employees who feel supported and valued are more likely to be motivated and invested in their work. This can also give organisations a competitive advantage, as companies with highly trained employees with higher engagement scores are better equipped to respond to market changes and challenges.

DW: What emerging trends do you see in skills-based hiring, and how can organizations stay agile in adapting their workforce strategies to meet these evolving demands?

AS: In the current climate of remote work, the significance of skills-based hiring is rapidly gaining traction. It’s become a pivotal approach as it helps hiring managers find and assess talented individuals who aren’t necessarily geographically close to them. Emphasis has shifted towards evaluating skills, particularly in roles like software engineering, product management, design, and marketing. By moving away from traditional CVs to tech-oriented assessments, organisations that adopt skills-based hiring can recruit better employees faster and for a lower cost

We are also seeing a shift away from the behaviours seen in a traditional job-centric talent management approach (where managers may be slightly possessive over their direct reports), towards encouraging their employees to contribute their skills to projects across various departments. To foster a culture of talent sharing, certain organisations are implementing talent marketplaces. These platforms match employees with available opportunities based on the skills and expertise sought by hiring managers.

DW: How can technology, such as AI and machine learning, be leveraged to enhance workforce planning and skills-based hiring processes, ensuring a more efficient and effective talent acquisition and development pipeline?

AS: New technologies like AI, automation, and machine learning are changing how we plan for work. We have seen that with the introduction of these technologies, it is possible to predict workforce trends and even suggest optimal strategies. AI is opening up untapped and overlooked talent pools, especially for organisations that are taking the skills-based approach. It offers greater access to diverse candidate pools that may not have had the means to attain advanced education via a traditional route. At Lorien, we believe using these tools could give organisations an edge over their competitors, because it allows them to quickly adapt to what the market is demanding.

AI is opening up untapped and overlooked talent pools, especially for organisations that are taking the skills-based approach.

The AI-driven outputs of employee skills mapping and L&D training applications support the ‘Buy Borrow Build’ aspect of workforce planning. This enables a move towards Total Talent Management – where existing employees’ ongoing skills development is tracked via technology, and relevant courses are recommended to support upskilling – which in turn assists Lorien as a Workforce Solutions partner to plan for backfilling or additional hiring where employees do not attain the required skills.

DW: What trends and / or challenges do you foresee organisations facing in 2024 off the back of a year that never quite went into recession but didn’t overachieve either?

AS: As we start to see economic signs of recovery following some very turbulent pandemic years, the job market continues to contract. One of the main challenges that will face organisations in 2024 will be the shift back towards a ‘return to office’. While returning to the office can improve collaboration, innovation, maintain a strong company culture, and improve productivity, it can also be costly for employers as it decreases flexibility and introduces commuting times for employees. Companies should carefully consider these factors when deciding whether to return to the office and should work to find a balance that meets the needs of both the company and its employees.

Another major challenge in 2024 is recruitment, especially in the face of skills shortages and limited hiring budgets. The skills shortage is not a new problem, but it has been exacerbated in recent years by the pandemic, Brexit, and the ageing population. According to McKinsey, the UK will face a shortfall of 3 million workers by 2030, with sectors such as health care, education, and engineering being the most affected. The competition for talent will remain fierce in the UK despite the economic uncertainty, and organisations will need to adopt innovative strategies to attract and retain the best candidates.

As we move into the new year, the significance of E, D&I (and also broader ESG goals) within the workplace is growing, and in 2024 and beyond we predict challenges for organisations looking to harness the progress of the technological advancement of AI, whilst ensuring use of AI doesn’t hinder progress towards EDI goals. AI can help in identifying and mitigating biases in the recruitment process, which can contribute to fair and equal employment opportunities. It can also assist in making the recruitment process more inclusive for candidates with disabilities. For example, AI-driven tools can make online assessments and interviews accessible to a broader range of individuals, promoting inclusivity and equal opportunities, and also positively impacting a company’s carbon footprint and energy usage. AI can match candidates to job roles based on their skills and competencies rather than relying solely on traditional qualifications in order to provide a more equitable pathway for individuals from underrepresented backgrounds.

However, concerns about discriminatory outcomes from AI algorithms inheriting biases that are present in historical hiring data, as well the worry over lack of transparency (i.e., the “black box” nature of AI algorithms) can make it challenging to explain why specific hiring decisions are made and leads to concerns in ethics. Workforce Solutions providers and their clients will need to closely monitor the developments in technology that supports EDI, as well as continuing to maintain human interaction, guidance and governance over usage.