Skills Over Titles: The Rise of the Skills-Based Workforce

Workplace trends in the US have undergone seismic shifts in the past five years. We saw pandemic-enforced work-from-home arrangements, the Great Resignation, Quiet Quitting between 2020 and 2022. In 2023, there have been countless other trends in workplace culture now that Gen Z established and, in some cases, back at the office. As a result, we’re seeing more companies look for alternatives to ‘the traditional model of work’. And one alternative that we’ve been seeing more of is ‘skills-based’ jobs.  

What is a Skills-Based Workforce? 

Skills-based companies adopt an approach where the primary focus lies on an individual’s specific skills, competencies, and capacity, rather than traditional qualifications like degrees or work history. This paradigm shift prioritizes talent and ability over titles and hierarchies. 

A skills-based workforce would typically have fluid roles, where an individual’s workload evolves based on their skills and the strategic needs of the organization. This can increase work empowerment and engagement and decrease the risk of ‘quiet quitting’ (the trend to reduce effort to the bare minimum that the job requires).  

These organizations also tend to promote continuous learning and development, which can reduce your risk of employee churn (since your team meets their personal development aspirations) and your risk of skills shortages.  

Skills-Based organizations are 98% more likely to retain high performers, and 57% more likely to anticipate change and respond effectively and efficiently – Deloitte. 

Operational Challenges When Implementing a Skills-Based Workforce 

Implementing a skills-based approach to working, while effective for many organizations, is challenging. We’re going to dig first into some operational considerations and then some legal challenges below: 

• Skills Assessment and Mapping: Accurately identifying and mapping the skills of each employee requires sophisticated assessment tools and methodologies. 
• Training and Development: Organizations must invest in comprehensive training programs and learning opportunities, which can be resource intensive. 
• Change Management: Addressing employee resistance and fostering a new organizational culture is a complex process. 
• Workforce Planning and Management: Aligning the right skills with evolving business needs presents a logistical challenge. 
• Performance Measurement: You will need to develop new metrics that accurately reflect employees’ skill utilization and contribution to the organization. 

• Recruitment Strategies: Shifting the focus from qualifications to skills in the recruitment process requires new strategies and tools. This shift may also require retraining of HR personnel in new assessment techniques. 

Legal Considerations 

Some of the legal challenges that come with implementing a skills-based workforce include (but are not limited to): 

• Pay Transparency. Skills-based companies must still comply with any relevant pay transparency laws, like those in California.  
• Wage and Hour Compliance: In a system where roles are more fluid, companies must remain vigilant in classifying employees correctly under wage and hour laws. This is crucial for determining overtime eligibility, especially for roles that blend exempt and non-exempt duties.  
• Anti-Discrimination: While skills-based organizations are more likely to provide an inclusive environment, it’s important to comply with anti-discrimination laws – including ensuring that the criteria used to evaluate skills and allocate roles should be objective and non-discriminatory. 
• Record-Keeping Requirements: With the complexity of a skills-based model, maintaining accurate records becomes crucial. Employers must keep detailed records of employee skills assessments, training, role changes, and compensation adjustments. 

Please note that these are just some of the legal considerations. We encourage any companies considering introducing a skills-based model to confer with legal counsel.  

If your organization needs help with employment compliance, reach out. Our attorneys would love to work with you.  

• Employment Law