Strategic management of critical skills

Introduzione

In the “Thinking Space” on Thursday, February 24, we discussed the topic of critical competencies and questioned whether it should be approached tactically, when the need arises, or whether strategic management of critical competencies is not appropriate-if not indispensable.

Critical skills are not only those related to digital professions. They are all those skills that are scarce in the market and strategic to the business. For which strategies must surely be “different”: anticipatory, linked to market logic rather than internal equity, and in some cases generating the need to create skills development centers when they can no longer be found on the market.

It is a key issue for HR as much as for business, but often treated with “non-systemic” approaches.

 

The future of expertise

The nature and management of knowledge and its application side, competencies, have always ignited scientific and philosophical debate.

Isaac Asimov, a famous science fiction writer and popularizer of science, imagined as early as 1951 in his novel Foundation a future where humanity goes into crisis due to the inability to manage skills and the enormous amount of accumulated knowledge.

Returning from science fiction to reality: both at the general level and at the enterprise level, understanding, mapping and managing critical skills is of paramount importance.

All the more so today as the job market demands new skills and others become obsolete, and all faster and faster.

New skills, old skills

According to a recent study by Gartner:

• From 2018 to the present, an average of 6.3 percent more skills are needed to do a specific job.
• At the same time, if three skills were needed to do a job in 2018, one of them will no longer be needed in 2022.
• Finally, this continuous addition of needed skills actually creates an “obstacle course” that dramatically reduces employability.

In the face of a fast-changing scenario:

• skills mapping must be dynamic;
• it is critical for companies to be able to recruit those who have the meta-competence to succeed in learning new skills.

Let’s define which skills are “critical”

 

When we talk about Critical Competencies (CC) we are not only limited to those of cutting-edge technologies but all those skills that are scarce in the market and strategic to the business.

Importance / cost / scarcity matrix

In our opinion, there are 3 + 1 dimensions to define a skill as “critical” (see next figure1):

• The difficulty in finding it in the market (recruiting) or difficulty in training it internally (training);
• The importance to the business of the specific competency;
• The scarcity of the competency in the organization;
• The fourth dimension is time: what is critical today and what will be critical tomorrow or the day after? Time intertwines and changes the previous three dimensions.

 

Shifts in criticality along the time axis

Representing graphically the reasoning just made, taking into account the time factor, the same competency can vary in its criticality.

At the same “level of presence” in the company at time t1 it may be unimportant and easy to find. At time t2 it may become harder to find and more importnte, at time t3 be particularly difficult to reprerce or train and strategic to the business.

Similarly-and usually, sadly, even more quickly-a skill can become obsolete.

Recruiting in a nonlinear market

The difficulty of recruiting is related to a nonlinear job market. Many jobs that are common today did not even exist 15 years ago, and many others existed but looked completely different.

The drivers of these changes are many and difficult to predict, for example:

• a skill may become scarce because it is related to emerging technologies or the application of sustainable processes.
• the global market brings talent to countries or companies where their skills are more valued.
• Some skills are “forgotten” but continue to be critical in some areas.

Training and reskilling

It is often not easy to train skills internally. There are a number of circumstances that can complicate the situation:

• The size and extent of criticality may be perceived late.
• Preconceptions and stereotypes make the handover between generations difficult.
• “Experts” do not have time to teach caught up in the needs of current business.
• Those who can do do not always know how to teach or have the tools to do so.
• In many Italian companies, the adoption of different technologies (production lines, machines, methods) for opportunistic reasons creates a patchwork of solutions that actually makes it impossible to find the already trained personnel outside.

Leverage for business

The strategic nature of skills can have many positive and negative declinations:

• In a high-tech company it can be the critical success factor or the element that makes it the market leader.
• In a traditional company it may represent the ability to ultimately bring a quality service or product to the market.
• In the most critical cases, the lack of specific competencies due to progressive loss, neglected or underestimated, can bring an entire business sector to a standstill or loss of profitability.

A strategy for critical skills

Knowledge management and the corresponding “application” skills are a critically important issue in all human domains.

In business, only a strategic approach with a broad time horizon can help ensure that we do not lose our core competencies and/or plan for the acquisition of new competencies critical to our organization.

The starting point is the business strategy (see Figure 3) and the core competencies to achieve it. Then follows a definition phase where the critical competencies are identified and made explicit, the level of competence needed to respect the strategic oobjectives. After the definition, we move on to assessing and mapping our people. We can then be clear about skill gaps (presence/absence of a specific skill or inadequate levels) and plan our “skill count” quantitatively and qualitatively. Finally, we move on to the management of the “skill pool” to ensure the various business areas have the quantity, quality of skills, avoid their obsolescence as much as possible, apply the necessary training or search externally for the appropriate skills.

 

Discussion in groups

As usual in our Thinking Spaces, we divided into subgroups to discuss the above, following some guiding questions: is critical skills management on the HR agenda? Is the topic perceived as “strategic”? Are there dedicated resources? What systems do you use to support it? How adequate do you consider the way the topic is handled in relation to relevance?

What emerged from the discussion

In our focus group discussion, the discussion was particularly rich and some very interesting insights emerged, which I try to summarize briefly:

The management process

The competency management process is on the HR agenda, but it is done in tandem with the business. Often, in fact, it is the business that outlines what skills are needed. However, this is linked to a lack of leadership that leads to a fragmented and reactive set of activities rather than an orderly and guided process. The issue of critical competencies is certainly perceived as important but not embedded in an organic process and treated as strategic. As a result, the resources that follow its activities are not as dedicated and focused.

The definition of “critical competence”

There is no clear and agreed definition of critical competence. Therefore, the definition we have proposed through the importance/difficulty finding/shortage matrix turns out to be extremely functional in identifying critical competencies and managing them in advance in a more orderly manner. Essential in this is the intervention of business leaders who must state the strategy and thus identify the critical competencies of the present and near future. We believe this is often less difficult than it sounds.

What are the big guys doing?

We wondered what the big technology groups are doing about competencies: have they developed tools and methodologies in this regard? How do they address the issue of technical skills and talent? Not having complete information on this, we promised ourselves to investigate.

Group competencies

We observed how skills, especially critical skills, are often the assets of teams rather than individuals. This observation, which sometimes underlies major acquisitions among technology companies or those with highly specialized skills, points to a redefinition of competencies from the individual to the close-knit, cohesive, complementary group.

Global management of competencies

Comprehensive management of all corporate competencies, barring particularly simple cases, is today and perhaps for a long time yet impossible to implement in practice. The first stage of comprehensive mapping, done in a systematic way, is itself long and complex. The subsequent phases of maintenance, extension, management and planning become too onerous and are usually abandoned, effectively rendering even preliminary operations a dead letter.

Guidelines

From what we have seen and discussed up to this point some guidelines emerge that, as HRI, we will further elaborate on and try to make “method”:

• systematically identify critical competencies with the participation of HR, business leaders and employees;
• limit activities to the critical roles and competencies but manage them all the way through; in particular, it is crucial to consciously arrive at the “operational” choices: recruiting or training (make or buy) and planning;
• identify the roles and skills that with the least complexity return the largest possible numbers. Think, for example, of bank branches, large chain stores, some factories, etc., where there are relatively few roles and related skills but many people in charge;
• think of a system for strategic management of critical competencies that is not just a repository but an active decision support by providing insights and simulations;
• delineating what are “team competencies” thus creating clusters that take the place of individuals at all stages of the process: mapping, identifying critical competencies, managing, planning, training, etc.

Conclusions

Precisely with regard to systems, we agreed that there are no complete and functional ones for mapping, managing and planning competencies. ERP modules for personnel management are great repositories but provide limited and certainly insufficient help with decisions regarding critical competencies.

We believe that the topic of competencies, particularly critical competencies, should be brought to the attention of HR managers and business leaders because we believe it should be treated as a strategic issue throughout the organization. HRI is working on creating a tool for mapping, evolutionary and agile management of competencies. If you are interested in being part of the pilot project and co-building this revolutionary tool with us please write to us at info@hrintelligence.it or contact us directly.