A Sustainable L&D Strategy: Why Skills Health is Key

And why large organisations are a bit like athletes.

Skills health and its importance for sustainable talent management


In today’s world, digital transformation is all around us: the changes that first disrupted verticals like banking and insurance are now propagating everywhere. When a company makes headlines with a simultaneous multi-thousand layoff and hiring effort at the same time, you might wonder: couldn’t some of the people fired have filled a part of the newly opened positions?

The answer to this question, quite often, is that the company simply needed different skills than they already had in-house: the people leaving the company just wouldn’t be able to work in the open positions because they don’t have the right capabilities. Between obtaining skills through buying (hiring), borrowing (consultants) and building (learning & development) capabilities, the latter option is by far the most time-consuming. As an enterprise-facing imminent transformation, time is probably the hardest thing to come by -- so how do you anticipate the impact of transformation on your workforce? Let’s dive right into it.

How Can We Define Skills Health?

Large organisations are a bit like athletes: they are in a continuous contest to stay ahead of the competition. Just like a marathon runner will check their vitals on a daily basis, making sure your organisation is healthy is crucial. One of these essential checks is skills health, which is the combination of how relevant your skills are to your challenges, and to what extent they are sufficient to address them. Skills health is often taken for granted when things go well, and very hard to improve when your back is already against the wall. That’s why, just like our marathon runner, you want to keep a continuous eye on things and tackle any skills health issues before they turn into a real problem.

Skills health can be defined on several levels:

  • On the organisational or departmental level, describing how aligned (a part of) the organisation is with its collective skill requirements.
  • On the employee level, showing how well a person’s skill set aligns with their current or to-be position.
  • On the skill or competency level, indicating if specific skill sets within the team or company are at risk today or in the near future.

The chart below shows the skills health of a company department, indicating for which internal capabilities it has a comfortable position (the ‘low risk’ zone), but also where action will be required (the ‘high risk’ zone). Skills with a quality risk can typically be addressed relatively swiftly with learning & development, whereas quantity risks tend to take a longer time to resolve without attracting outside talent.

Skills health and risks within your organisation

While awareness of the concept of skills health is the first step, the main value is in actually following up on it in the context of your organisation. Many companies do this through big, manual skill surveys. However, these can be extremely expensive and the results become outdated annoyingly quickly. If you want to be at the top of your game continuously, a single big health checkup every couple of years just won’t do. It’s for this very reason that leading companies like Unilever have shifted their gaze towards much more continuous capability building and evaluation.

The Dimensions of Skills Health

Skills health, can be seen as the combination of three separate assessments of the skills in your organisation:

  • The size of the skill gap (on an individual level) or skill deficit (on an organisation level) between the skills people have today and the requirements for the job they currently work in.
  • The employability of each person in the organisation: should their current position change or disappear, to what extent would they be able to use their skills for the company?
  • The future proofness of your skills: are you leading innovation, keeping up with it or lagging behind the changes within the industry?

What is employability?

Employability is a metric that describes how in-demand the skillset of a person is in their practical situation, as a number between 0 and 1. For example, if you are an IT specialist living in the countryside, you might have low employability due to the lack of demand in proximity. The same skillset in a city, however, is much more likely to result in high employability! This way, the metric really describes how employable someone is given not just their skills, but also the constraints they have in applying them.

What is employability?

How You Can Use Skills Health

Skills health can be leveraged in two separate ways. First of all, it can serve as a concise analysis of how your organisation is doing on the topic of skills. Looking at the health metric over the whole company and zooming in on individual departments or people allows you not just to see today’s state, but also how things are evolving month over month. Secondly, skills health impact can be used to move towards more data-driven people decisions. For example, say that your company is searching for a new accountant, and a candidate is considered that is too junior for the role at hand. If the surrounding team for this position is already short on experience for the matter, going ahead with this hire would mean a clear hit to skills health -- however, it could also be that there is sufficient experience in-company to onboard this person quickly, making the impact much smaller.

While skills health is not the only factor to be considered in people decisions, it’s important to be mindful of it. Just like not taking care of your personal health makes you that much more sensitive to unexpected events and fallbacks, skills health is essential to how your organisation handles change. A company struggling with poor skills health might be able to survive in the steady-state (albeit inefficiently), but upon disruption of their market, a major capability misalignment can be a huge obstacle towards adapting to the new status quo.

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