6 Reasons You Need a Skills Taxonomy (and What Most Companies Get Wrong)

You're managing a talented team but still finding gaps in skillsets across your organisation, training plans aren’t aligning with business needs, and workforce mobility feels like a herculean task. Sound familiar? You might benefit from a skills taxonomy - a strategic tool that categorises and manages competencies within your workforce. Read on to understand what a skills taxonomy is, how it operates, and why it's essential for business success.

1. What is a Skills Taxonomy?

1.1 Definition

A skills taxonomy is essentially a structured classification system that defines the skills crucial for the various roles within your organisation. Imagine it as a comprehensive index or blueprint that maps out the required competencies for each job, aligning it with your overall talent strategy. But it’s not just a list of buzzwords - its real strength lies in its systematic categorisation and detailed insights which help in decision-making.

1.2 How It Works

At its core, a skills taxonomy works by organising skills into a hierarchy - basic, intermediate, and advanced - connected to job roles across your organisation. This structure is maintained through collaborative efforts between HR, management, and employees, often supported by digital platforms like Evidenced at the assessment level.

1.3 Why It's Essential

The term "essential" isn't used lightly - implementing a skills taxonomy can be a game-changer for your workforce strategy, especially at an enterprise level; a skills taxonomy provides necessary pathway for employees and a clear roadmap for HR, allowing every employee to know what they need to progress at your company.

This results in accelerated training and development, as well as proactive career planning and succession management opportunities. It's all about bridging the skills gap quickly and efficiently, ultimately saving time and resources.

2. Six Reasons You Need a Skills Taxonomy

2.1 Identify Critical Skills Gaps

Identifying skills gaps within your organisation can sometimes feel like searching for a needle in a haystack, but a well-developed skills taxonomy simplifies this by offering a structured framework. This is because when you map out the existing skills against your business needs, gaps become glaringly obvious, and instead of guessing based on sporadic reports, you gain a clear picture of what's missing.

A good way to asses your need for a skills taxonomy is by starting with these steps:

1. Conduct a Skills Audit: assess the skills your current workforce possesses via self assessments, job description reviews or job shadowing.

2. Compare Against Business Objectives: Align skills audits with strategic goals.

3. Spot the Gaps: Identify where skills are lagging in relation to current and future needs.

This results of this smaller audit should make it clear whether building a skills taxonomy is right for your company.

2.2 Align Talent with Business Strategy

Aligning your talent effectively with your business strategy can have transformative effects, and with a skills taxonomy in place it becomes much easier to map employee capabilities directly to organisational goals. Benefits include:

• Role-Mapping: Matching new team members to roles that accelerate the achievement of business goals.

• Strategic Mobility: Moving individuals into roles or creating new roles for them that directly support core strategic objectives.

• Talent Utilisation: Ensuring that the best people for a role are applied where they can have the greatest impact.

2.3 Improve Workforce Planning and Mobility

Effective workforce planning benefits enormously from a skills taxonomy. For example, knowing who may be retiring soon and being clear on the skills they possess, means you can ensure a seamless knowledge transfer and make sure they don't leave a skills gap behind them. This also aids in strategic decision-making about when to recruit new talent, versus when to develop existing employees.

2.4 Enable Personalised Learning and Development

Facilitating targeted learning experiences fundamentally changes when you have a detailed skills taxonomy, as you can now tailor development programmes uniquely suited to each employee's skill set and career aspirations. This not only empowers employees but aligns learning with tangible business outcomes.

Consider some approaches like:

• Individual Development Plans (IDPs): Tailor these based on identified skills gaps and career aspirations, mapped to your skills taxonomy.

• Mentorship Matching: Pair employees with mentors that can guide them in addressing specific skill gaps.

• Ongoing Skills Tracking and Measurement: Regularly assess and update employee skill profiles to monitor progress over time.

Pro-tip: Encourage employees to take ownership of their learning journey. This increases engagement and maximises the gain from personalised development plans.

2.5 Data-Driven Decisions

Data is only as good as how it's utilised. A skills taxonomy allows you to make data-driven decisions by compiling a comprehensive database of workforce capabilities. These decisions can range from organisational restructurings to small-scale team assignments, all based on verified skills data rather than mere intuition.

This can be particularly useful at the hiring stage, as it allows you to easily implement structured interview templates based on the skills that your company really needs. Remember you can use tools such as Evidenced to roll out interview templates mapped directly to your skills taxonomy.

2.6 Future Proofing

Future-proofing your workforce is all about resilience and agility, and a well-maintained skills taxonomy is the foundation, offering a proactive stance on workforce development and keeping teams prepared for future challenges.

To prepare your skills taxonomy for the future, consider:

• Trend Analysis: Continuously monitor industry trends to predict the skills that will be in demand.

• Cross-Training Opportunities: Encourage and facilitate cross-departmental skill development to enhance versatility.

• Scenario Planning: Use the skills taxonomy to run scenarios, assessing how various changes could impact skill requirements.

Pro-tip: Maintain a flexible talent strategy by frequently revisiting and updating your skills taxonomy. This keeps your organisation nimble in the face of change.

3. Common Mistakes Companies Make with Skills Taxonomy

3.1 Lacking Clarity and Precision

When building a skills taxonomy, the biggest pitfall is often lacking clarity and precision. Many organisations struggle because their skills definitions are either too broad or too granular, causing confusion among employees. To avoid this, consider defining skills through a detailed blueprint:

• Benchmark against industry standards to ensure relevancy.

• Use clear, concise language that can be easily understood by everyone in your team.

• Map each skill to specific roles and responsibilities for better context.

• Make every skill clearly observable and measurable.

It's also important to maintain transparency in who develops and updates your taxonomy. Too often skills frameworks become distant, disconnected documents because employees aren’t involved in their creation. Engage different departments during development to reflect their unique needs. This collaborative method will enhance accuracy, relevancy, and ultimately, acceptance of the taxonomy among your workforce.

Pro-tip: Involve employees from various levels and departments to co-create skill definitions, ensuring that the taxonomy addresses diverse perspectives and needs.

3.2 Not Keeping It Updated

A stagnant skills taxonomy quickly loses its value - technology and business strategies evolve, and so should your skills taxonomy. Organisations frequently neglect to update their taxonomy, which can result in misaligned skills that no longer serve the company effectively. Address this by:

• Setting regular review schedules (e.g., bi-annual updates).

• Implementing feedback loops with your teams to gather real-time insights.

• Aligning updates with project outcomes to reflect the latest business goals.

These practices ensure your taxonomy remains relevant and forward-looking, helping your company stay competitive.

Pro-tip: Use project retrospectives as checkpoints to update skill requirements, thereby aligning with changing business needs.

3.3 Underutilising the Taxonomy

Skills taxonomies often sit idle because organisations fail to integrate them into daily processes. Merely having a taxonomy is not enough, and to get the most out of it you'll need to embed it into critical HR functions, for example:

• Incorporating it into recruitment and appraisal processes to objectively assess candidate fit. Remember technologies like the Evidenced platform can help you easily embed any skills frameworks into your hiring process.

• Leveraging it for personalised learning paths through targeted training and development.

• Ensuring management buy-in by demonstrating ROI through data-driven metrics.

These integrations help maximise its utility across the organisation, ensuring tangible benefits that affect the every day operations of your business.

Ultimately, a well-designed skills taxonomy can transform your workforce management from reactive to strategic. It does this by enabling clear identification of skills gaps, aligning talent with business objectives, supporting personalised learning and career development, and providing a data-driven foundation for hiring, succession planning, and workforce mobility. And whilst HR frameworks are different for every company, we believe they should always involve a skills taxonomy at some level.

Need help embedding your skills taxonomy into hiring? See how we can help.