Skills as the new currency
Careers no longer progress in a neat line from learning to earning to retirement. Not only are people more likely to change jobs and even career tracks over the course of their lifetimes, freelancers who contract out their skills rather than work for an employer have become a significant portion of the labor market. Nearly half of working millennials fall into this category.
This shift is starting to transform human resource strategy and the traditional job hunt. Whereas candidates used to find jobs based on the institutions they attended and the social networks they developed, skills are the new metric for assessment.
The good news is that a skills-based economy is a more egalitarian one. Relying on pedigree allowed for social inequalities, giving people who had access to elite institutions and networks an unfair advantage while leaving many skilled individuals without access to roles where they would excel. It also led to labor market inefficiencies, as companies made hiring decisions without fully understanding the skills that a candidate brought with them.
The challenging aspect of this transformation is that many learning institutions and companies have still not adjusted to the reality that skills are the new currency. Acknowledging that requires offering working professionals frequent opportunities to add skills on an ongoing basis throughout their careers. Effective training is key to helping people excel today.
Adjusting to a skills-first mindset
Companies must adapt their recruitment and talent strategies as a result of this shift.
Human resource leaders should use skills as the professional currency by which to evaluate candidates, which may mean incorporating more testing and problem solving into the recruitment process.
Managers too should think about forming teams based on skills, rather than job titles. A recent Deloitte report notes that many organizations are restructuring from a hierarchical business model to project-based squads that come together for specific tasks. People are being recruited within their organizations to join projects based on their skills, rather than being assigned jobs by management, and they are being rewarded based on outcomes rather than tenure.
It’s not just technical skills that are of value. Problem solving, creative thinking, empathy and communications skills are worth a lot because those are the types of skills that are most difficult to automate. As a result, people who have a hybrid of technical know-how and social skills are in demand.
Using data to tap into skills
LinkedIn, which has developed a metric called the Skills Genome to understand labor market trends, used data collected from 630 million members and more than 35,000 global skills to better understand the labor market in China. The resulting report highlights what skills are prominent by region.
In a global economy, companies can harness such data to determine where to recruit talent, outsource work or open offices. That’s just one example of how skills are starting to dominate the conversation when it comes to managing talent.
“Findings like these are increasingly valuable as our society prepares for the future of work,” Jian Lu, president of LinkedIn China, said in a blog post about the report. Simply put, she added, “Skills are the new currency on the labor market.”
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