Information is power. Information begets knowledge. Knowledge leads to smarter decision-making. And who doesn’t want to make smarter, more informed decisions?
To empower your employees to make well-informed career decisions that result in stronger career agility, focus on these three business initiatives. Organizations that embrace all three initiatives can become a talent magnet, maximize agility for rapid decision-making and strengthen their competitive advantage.
Trend #1: Skills-forward movement
The skills-forward movement is where organizations employ skills-based talent strategies to unlock employee capabilities by aligning talent to critical skills. Their focus shifts from more macro jobs and roles to more micro-skills. This shift can help you achieve your organizational strategic goals by having the right number of people, at the right time, in the right place, and with the right skills on the right project. This shift can also help ensure that you hire, skill, promote and compensate talent based on the critical skills your organization needs to execute your strategy.
There are upskilling and reskilling opportunities aligned to employee career paths when you focus on skill-forward movement. Employees can engage in gigs or job rotations to continually develop skill sets. For example, there is a current global deficit of cybersecurity skills, yet demand continues to grow. Thus someone with cybersecurity skills will be in a higher salary band than a programmer. In contrast, an interested programmer can reskill to acquire cybersecurity skills if that is their desired career path.
For organizations, a skills-forward model delivers enhanced talent decision-making. With known employee skills, interests and career aspirations, it’s easier to make intelligent talent decisions. Decisions like where to buy (hire), borrow (outsource), build (develop internally), bot (automate), bound (promote across the org), bounce (remove low performers) or bind (retain high-growth potential employees) talent.
This skills-based rocket has left the launchpad. On September 29, 2022, Rep. Elise M. Stefanik (R-NY-21) introduced the Advancing Skills-Based Hiring Act of 2022 to the U.S. House of Representatives. You can track the progress of the bill here. The bill's purpose is to ensure pre-employment assessments are psychometrically sound and compliant with the law. Per SHRM (Society For Human Resource Management), a supporter of the bill, they state that the intent is to support employers who want to use skills-based hiring to strengthen their workforce. McKinsey & Company is already employing a gamified digital pre-hiring skills assessment to reduce hiring bias and identify a candidate’s markers for impact. Efforts by many organizations are already underway to reduce the degree requirements with a focus on skills for critical roles.
The benefits outweigh the transformation effort whenever an organization starts on the Skills-Based Organization (SBO) journey. As Deloitte states, shifting to an SBO makes work better for humans and humans better at work. That’s a win-win.
Trend #2: Pay transparency
One of the greatest benefits of attracting and retaining talent is fairness in compensation and clarity on how compensation links to in-demand skills.
In 2016 under Executive Order 11246, employees have the right to inquire about, discuss or disclose their own pay or that of other employees or applicants. They cannot be disciplined, harassed, demoted, terminated, denied employment or discriminated against because they exercised this right. Employers in all 50 states can further the pay transparency movement by enacting laws requiring more transparency, such as publicly listing salary ranges for jobs/roles.
As of January 2023, 23 U.S. states (46%) will have statewide pay transparency laws, nine states (38%) will have no laws, and eight states (16%) will have some regional laws that are not mandated statewide. Implementing pay transparency can positively influence the future of work with positive knock-on effects for employees and employers.
Skills-forward organizations that exercise skills-focused pay transparency can support learning and development by helping their people understand job pay ranges within their organization. When employees can better understand pay tiers, they can acquire the skills needed to move along the pay range and qualify for other jobs within or across functions.
There are pros and cons of pay transparency for employers. The transformation to pay transparency is an arduous task for organizations as it requires meaningful change management and a complete rethinking of how we’ve always done things, both in practice and ethos. With pay transparency, employers can no longer play the arbitrage game with employee pay since employees would be aware of any discrepancies, resulting in a negative impact on the business and reputation.
The pivot to pay transparency will empower employees by motivating them to bring their best skills to work and to upskill continually.
Trend #3: Human capital disclosure
Effective November 2020, the Security and Exchange Commission (SEC) mandated U.S. publicly held companies disclose their human capital strategy. In the spirit of transparency, public companies must share how they attract, develop and retain talent in their annual reports (10K). This mandate was a principles-based ruling, meaning that no standards or metrics are required for companies to disclose. They can tell their human capital story of how they attract, develop and retain talent however they would like. This ruling's purpose was to elicit information allowing today's investors to make more informed investment decisions.
After only one full year of reporting, we have found that the level of transparency varies widely and, in some cases, is more opaque than transparent. The SEC is revisiting the current rule and considering mandating specific metrics if organizations don’t voluntarily enhance their reporting. Organizations are struggling to tell their human capital story transparently.
Mandating human capital disclosure (HCD) is a massive benefit to employees. HCD offers current and prospective employees publicly available information via the company’s 10K reports. With transparency around pay and human capital strategies, employees can make informed decisions and take control of their careers which will prove to fuel business.
The benefits of executing all 3 initiatives
The benefits of organizations executing all three initiatives can be:
It’s time for all of us to embed skills and transparency into our corporate DNA. For more insight into the skills-forward movement, watch this conversation with Dr. Stacey Boyle.
If you feel galvanized into action, reach out to Cornerstone to speak to one of our skilling and transformation experts today! #WeGotYou
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