DCI's Publication Date: January 27, 1997

Skills-Based Management: New Key to IS Productivity

By Hank Riehl
Founder and Chief Technologist, SkillView Technologies

Skills-Based Management: What Is It?

Consider the old cliche about buying a drill. You don't buy a drill because you want a drill, you buy a drill because you want holes. The same goes for people. You don't hire people because you just want them ... you hire them for what they can do ... their skills and competencies. But isn't it odd that in a discipline as technical as Information Systems (IS), staff development, deployment, and hiring decisions are still made largely on gut feel? We apply the most rigorous rules to decisions about software, hardware, and networking platforms, but ignore these methods in staffing decisions. Staff costs usually dwarf technology costs, yet we allocate staffing funds with very little decision-making rigor.

Our business requires that individuals possess very specific technical competencies, but we do little to formally map those competencies to our business advantage. Nor do we view staff competencies as strategic assets, to be molded and developed to meet the future needs of the business plan. Of course people are important, but their competencies are the real substance of IS success.

So how do we typically manage in this environment? We just pile more and more work onto the 30 percent that we view as the top performers while shuffling the other 70 percent among various projects. The other 70 percent does contribute but we seldom give them anything really mission-critical. Is this because they can't do it? Or because we don’t really know what they can do? We make two assertions here:

1. Most people are capable of far more than we ask of them.
2. When properly motivated, most will willingly provide far more.

If one believes these assertions to be largely true, the question next becomes, "How can we ensure that our people willingly give us more?" Skills-based management may offer that mechanism through a disciplined program where skills are measured, tracked and combined into job descriptions. It's a program where project requirements can be run against the department's skill set and the best teams chosen. It is a program where employee's skill gaps are identified as areas of positive growth.

Skills-Based Management: A New Sense of Accountability

Skills-based management is about instilling change -- real change -- into the IS mind-set and value-set. It is a conscious strategy, laid out and endorsed from the very highest management levels. It is about skills, staff competence in those skills, and how skills relate to the I.S. business plan. The skills-based management organizational objectives are to:

• Instill greater responsibility into the individual for the development of valued skills by providing the informational resources to define, measure, and achieve that development.
• Instill greater accountability in managers and supervisors for their subordinates' aggregate skill set.
• Provide top management with consistent, strategic decision-support criteria for staff development, deployment, outsourcing, and hiring tactics.

In short, it is creating an environment where individual competence in vital skills is measured ... fed-back ... valued ... acted-upon ... nurtured ... molded.

Skills-Based Management: A Line Initiative

The true benefit of implementing skills-based management falls to the line IS organization, and only secondarily to HR and training. In its barest essence, skills-based management methods identify each staffer's competencies and their skill gaps, and point each staffer to pertinent development solutions to overcome those skill gaps. When competencies are openly cataloged, people set out to upgrade their abilities, resulting in a more talented, more productive staff. What if you could raise organization-wide productivity by 5 percent? Consider an IS organization of 200. At an average fully burdened cost of $60K per employee, annual payroll cost is $12,000,000. Extracting 5 percent more from that expense yields a $600,000 per year payback. That's the equivalent of 10 "free" people...year in and year out!

Skills-Based Management: The Software Component

A successful skills-based management initiative requires an enabling skill inventory and decision-support software application. A common mistake is to over-emphasize the importance of your software selection and skimp on the organizational, strategic planning aspects of the initiative. A successful skills-based management initiative is far more about effecting cultural and value changes to yield big productivity gains than it is about putting in a skills software package. Software is the easy part. In fact, skills-based management's software requirement calls for little more than an up-to-date, easy-to-use skill inventory application. The basic components of the application are skills, competency ratings, position profiles, employee profiles and learning events. All these are combined in a repository which, when fully populated, yields decision support of the highest order.

Skills
Skills should represent those skill-or-knowledge items deemed vital to organizational success. There are four general types of skills:

• Technical, relating to specific IS concepts, methods, tools and platforms
• Supervisory, enabling one to effectively supervise others
• Interpersonal, enabling staffers to communicate and interact effectively
• General Business, line-of-business and support infrastructure

Many IS organizations prefer to implement only technical skills in their skills-based management initiatives. Technical skills are observable, demonstrable, and/or testable. The other skill-types are softer, more subjective, less easy in which to confidently quantify competence.

Technical skills may be very general -- "COBOL Programming," for example -- or very specific, such as "Creating calculated columns in SQL Select statements." The trade-off is greater decision-making detail at the cost of a larger skill dictionary. A common mistake is to define "everything everyone does." The more purposeful objective should be to define "everything that anyone does that we really need to track for strategic and tactical decision-support purposes."

Competency Ratings
Competency Ratings are a simple scale or gradient describing lesser to greater competency. It could be as simple as 1)Beginner 2)Intermediate 3)Expert. Or there could be six or eight levels defined, each describing a slightly more-capable degree of expertise.

Position Profiles
Here, supervisors define the level of ability required in each subordinate position in each skill in the dictionary. It defines "fully qualified" for each position in each skill. A given position's skill-by-skill collection of ratings is that position's model skill profile, which becomes the competency benchmark of that position for comparison purposes.

Employee Profiles
In similar fashion, employees tell us their actual level of ability in each skill. A given employee's skill-by-skill collection of ratings is his/her actual skill profile. Comparing an employee's actual profile to his/her corresponding model position profile is how we determine skill gaps.

Employee self-assessment has been shown to be accurate; people are generally trusting and honest. But prevailing culture can have an influence. Validation techniques include:

• supervisory review and signoff
• peer review
• client review
• testing (gaining acceptance for technical skills)

Learning Events
Learning Events (LEs) are the solutions to skill gaps. They can be any resource or activity recommended to further develop skills. Not necessarily "events" per se, LEs could be books, tutorials, CBTs, lecture/lab classes, conferences, user groups, even lunch with a subject-matter-expert ... anything deemed helpful in skill development. The LE repository acts as an on-line resource guide.

Once the repository is populated, each Employee Skill Profile can be compared to his/her Position Skill Profile and skill gaps are identified.

These skill gaps are management's business risks, but are also the opportunity presented by skills-based management. You can model the competencies you require for success with new technologies, and then determine how staffers' current talents match up with those modeled needs. Individual Development Plans will quickly put you ahead of competitors still counting on gut feel!

Skills-Based Management: True IS Decision Support

With a skills-based management repository populated, vital decision-support and strategic planning information becomes available using consistent, quantified data:

• Employee Skill Gap Reports; Employee Development Plans
  -- Show each staffer where they need development ... and what they should do about it

• Roll-Up (Aggregate) Skill Gap Analyses; Competency Distributions
  -- Where are we under-skilled? What is our bench strength? Where are our risks?

• Training Requirements
  -- Who needs what training? Why? What non-training solutions are available?

• Team Building Queries / Competency Searches
  -- Who meets a certain profile? Who doesn't?

• Succession Planning; Career Planning

• Job Applicant and Contractor Analyses; Applicant/Contractor Searches

Every manager has access to the skill-based information he/she needs to achieve goals. They see their skill-based risks and can plan to develop talent where it is most needed.

Skills-Based Management: The Common Pitfall

The risk area in skills-based management initiatives, where stated objectives and day-to-day use can disconnect, is when management makes use of skill-based data in ways different from their stated intentions. Top management sponsors must be diligent that skill-based data is used only for the purposes which had been expressed to the staff: personal development and higher departmental productivity.

Most believe that a very open policy toward the information is the healthiest for an organization wishing to improve productivity by instilling a new skill awareness. This does not necessarily mean everyone should view each other's competencies. But employees should be able to freely view their own skill profiles, and generate their own skill-gap and development plan reports. Most organizations would even encourage employees to compare themselves with profiles of other positions, to support individual career-planning. This would describe the positive approach, where the information is treated as a powerful means of creating personal responsibility and initiative.

Trying to combine skills-based management with the formal performance appraisal process (for promotions, salary actions, etc.) is where things get risky. Organizations which have succeeded with skills-based management have followed the conscious strategies of divorcing their skills system from the formal performance appraisal process. You cannot expect honesty when asking people to tell you their capabilities if they believe that information will used in promotion and salary decisions or worse, against them for layoffs. And if honesty is compromised, accuracy is compromised and the data becomes far less useful for its stated purpose.

Skills-Based Management: The Benefits

Today's IS departments are under a number of challenges. An IS department run under skills-based management tenets has the following advantages:

• Quicker adaptation to technology change: The usefulness of the newest technologies can be assessed immediately by analyzing position definitions. If these new skills are found to be crucial to the business objectives then the skills can be added to the repository, competencies measured, skill gaps identified and immediate training ordered. Meanwhile, competitors, influenced by media hype and the FUD factor, are scrambling to embrace every new technology whether it benefits them or not.

• Attraction and retention of top producers: The good people want to work where there is an institutionalized system of competency rating. They want to work on project teams chosen through objective skill analysis, and not political favoritism. They want to work where they are given the tools to improve in the right areas.

• More for the dollar: The training dollar is spent on focused areas of greatest need, the recruiting dollar is spent just on skills that are most needed, the labor dollar is maximized over time because employees develop only those skills which fit the corporate business objectives.

• IS serves the business objective and can quantify exactly where new budget is needed to fulfill that objective, or where current budget has been correctly expended to achieve that objective

Skills-Based Management: In Summary

Skills-based management goes to the very core of the organization, instilling competence and contribution as the culture's value-set:

• Top IS Line Management views the organization in terms of its total skill-set, allowing them to truly "engineer" the staff to meet the business mission.
• Staffers feel accountability and responsibility for their own personal growth and development. They know exactly where they stand, and exactly what to do to enhance their worth.
• Supervisors become more accountable for their peoples' abilities, and foster their subordinates' development accordingly.

Skills-based management offers high rewards to the organization which implements it in a thoughtful, committed fashion. Even small productivity percentage gains translate into huge dollar returns. The messages that skills-based management sends to the staff and the values it instills are just intuitively right ... positive ... healthy. The questions we suggest you ask and answer in your investigations are:

1. What are our skills-based management business objectives? What changes do we wish to affect? What payback do we expect?
2. What information do we really need to collect to support the business objectives?
3. Have we carefully laid out staff communication programs? Is what we are telling them consistent with what we plan to do? Is everybody on board?
4. Do we really have the resolve to stick with it? Will we keep the repository up-to-date (once or twice a year) and refine it as changing business conditions dictate?
5. Have we chosen an easy-to-implement skills-based management software tool which supports our need with a minimum of overhead?

For those willing to invest modest time and money to achieve fundamental culture shifts and big payback productivity benefits, skills-based management warrants closer consideration.

Hank Riehl is the founder and chief technologist of SkillView Technologies. To learn more about skills-based management, please see the SkillView Web site.