Traditional talent management based on high performers and high potentials does little to enhance a firm’s strategic agility. Focusing on skills-matching talent management, on the other hand, enables companies to develop the dynamic capabilities at the heart of strategic agility.
In addition to traditional static, job-oriented, high-performer talent management initiatives and programs, companies should approach talent management through a skills-matching perspective focused on aligning individual skills with organizational goals and strategies.
A study based on in-depth interviews with 34 senior HR leaders from eight countries including Singapore, China, the United States and several European countries argues that talent management built on skills-matching will enhance a firm’s strategic agility. Strategic agility is the ability of a firm to react quickly and effectively to the ever-changing demands of a volatile business environment.
A skills-matching perspective recognizes the critical role of skills and calls for a proactive approach to skills management. In such a company, the workforce would be, for example, continually upskilling, reskilling, or learning new skills essential to current and future success, such as skills related to automation and digitalization.
The study identifies two types of skills-matching. Initial skills-matching aligns individual skills with the skills needs of the organization through the external labour market. Initial skills-matching efforts include investing in in-demand skills (which often begins by identifying skills gaps), shifting the focus from jobs to skills (for example, reorienting job profiles around skills), and developing new roles organically to fit business needs. These efforts lead to dynamic capabilities, such as becoming more alert to external shifts and developments, and becoming more adept at uncovering opportunities, recognizing patterns, and thinking outside of the box. These dynamic capabilities combine to improve the firm’s strategic sensitivity, which is one of the key components of strategic agility.
Dynamic skills-matching aligns individual skills with the skill needs of the organization through the internal labour market. For example, firms will strive to be more flexible in how talent is allocated, perhaps through the use of gig projects. They will also increase transparency and empowerment: opportunities will be visible to individuals, who are encouraged to own their careers. Continuous learning and development is another example of dynamic skills-matching efforts.
These efforts will generate another set of dynamic capabilities, including an awareness of the interdependency of all parts of the organization and adaptive learning approaches (not just fostering upskilling and reskilling initiatives, but also establishing a culture of continuous learning and encouraging learning-by-doing). These dynamic capabilities enhance a firm’s resource fluidity the ability of a firm to keep talent resources flowing easily to where they are needed. Resource fluidity is the second key element, after strategic sensitivity, of the strategic agility of a company. In sum, skills-matching efforts lead to the development of dynamic capabilities that underpin the two meta-capabilities strategic sensitivity and resource fluidity that enable strategic agility.
This study makes a compelling argument for firms to focus on skills acquisition and development in addition to traditional talent management approaches. It also emphasizes the need to have a holistic approach to talent management, that is to view skills demands from an organization-wide perspective. Applying a consistent language for skills throughout the firm, and completing an organization-wide skills inventory (identifying available skills and skills gaps) are key steps in applying the skills-matching approach.
Leaders also need to recognize and understand the dynamic capabilities that, as described above, will be built through the skill-matching perspective. The development of these capabilities will have a broad impact on HR practices such as workforce planning, talent acquisition, and performance and rewards management. HR technology and skills-matching software and platforms can support the effective deployment of the skills-matching approach.
Finally, implementing the skills-based perspective will not come without its challenges. The structure of talent acquisition can make a difference, for example. Talent acquisition may be siloed within the organization to individual business units or regions, undermining a holistic approach. Another challenge is aligning HR and talent management frameworks to a skills-matching focus. If most promotions are still based on traditional parameters such as performance, for example, the skill-matching efforts get lost. Skills must also be clearly defined for skills-based talent management to be effectively implemented. As one leader quoted in the study noted, skills-matching can hardly work unless managers actively engage with employees on what skills and capabilities they possess.
Stefan Jooss’ profile at UQ Business School
https://business.uq.edu.au/profile/15565/stefan-jooss
David Collings’ profile at Trinity Business School
https://www.tcd.ie/business/people/faculty-professors/collingd/
John McMackin’s profile at Dublin City University
https://business.dcu.ie/staff/dr-john-mcmackin/
Michael Dickmann’s profile at Cranfield School of Management
https://www.cranfield.ac.uk/som/people/professor-michael-dickmann-327415
A skills-matching perspective on talent management: Developing strategic agility. Stefan Jooss, David G. Collings, John McMackin, Michael Dickmann. Human Resource Management (January/February 2024).
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