What is a skills taxonomy and why is it needed?

Contents:

• What is a skills taxonomy
• Why is a skills taxonomy so attractive for L&D
• Why a skills taxonomy is not an ideal solution
• How to implement a skills taxonomy

What is a skills taxonomy

There is no single definition of taxonomy in education, and different professionals use different Terms. Some call it a framework, others a corporate vocabulary. For example, Mark Osnick, Chief Content Officer at Skillsoft, describes the skills taxonomy in his article for Training Zone as follows:

A skills taxonomy is an organizational framework that helps companies systematize, prioritize, and identify the current and future skills of their employees. This approach allows organizations to effectively manage human resources, define key competencies, and plan talent development. In a rapidly changing labor market, a skills taxonomy is becoming an important tool for increasing a company's competitiveness and adapting to new requirements.

A skills taxonomy is an essential tool for managing competencies within an organization. It is a structured database that contains information on the necessary skills for various roles and for the company as a whole, taking into account its specific characteristics. Typically, the taxonomy structure begins with identifying key areas or roles, after which competencies and skill sets are added. Each skill set is then broken down into specific competencies, allowing for a more accurate assessment of employee training and development needs. An effective skills taxonomy helps companies optimize recruitment processes and develop internal resources, ensuring that employees meet market demands.

The skills taxonomy methodology proposed by American L&D specialist Anthony Santa Maria is an essential tool for building effective teams. The first stage of this process is an inventory, which involves analyzing and compiling a skillset for a specific professional role. This aspect is often mentioned in job descriptions, vacancies, and other related documents. It is important to note that during the inventory, it is necessary to clearly distinguish between skills and competencies. Skills represent specific abilities, while competencies combine several skills, forming more complex groups necessary for the successful completion of tasks. Understanding these differences facilitates a more accurate definition of candidate requirements and staff development.

The next stage of the process is skills clustering, which involves combining them based on specific criteria. Clusters are not tied to specific roles, but provide a broad overview of the key skills needed by a company. For example, the "Teamwork" cluster could include skills such as collaboration, conflict resolution, communication, and team building. Anthony Santa Maria emphasizes that clustering plays a critical role in creating a taxonomy: at this stage, it becomes clear where skills overlap and how the same skills can be applied in different roles. The final step in this process is taxonomy visualization, which provides a comprehensive understanding of skills and their relationships. Creating a skill hierarchy from scratch can be challenging, especially for large companies. However, modern platforms such as LMS and LXP offer tools for building structured taxonomies, as noted by Russian experts back in 2021. Many of these systems already have built-in skill clouds and a tagging function that allows you to assign specific skills to specific roles. Moreover, there are libraries and analytical tools that help determine which skills are lacking in a company and which have become unnecessary. This significantly simplifies the skills management process and improves employee performance.

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Competency-based approach in education: what it is

A competency-based approach to education is a method aimed at developing students not only knowledge but also the practical skills necessary for successful functioning in modern society. This approach emphasizes the ability to apply acquired knowledge in real-life situations, as well as the development of critical thinking and teamwork skills.

The core idea of ​​the competency-based approach is that education should be results-oriented. It is important not just to memorize information, but to be able to use it to solve specific problems. This requires educational institutions to implement new methods and technologies that promote active learning and student participation.

The implementation of a competency-based approach in educational programs helps develop skills that will be in demand in the labor market. Employers value not only theoretical knowledge but also the ability to adapt to changing conditions, work in a team, and make informed decisions.

Therefore, a competency-based approach to education is an important element of the modern educational process, contributing to the preparation of qualified specialists ready for the challenges of the 21st century.

Why is a skill taxonomy so attractive for L&D?

The development of skill taxonomies brings significant benefits to those involved in employee training and development. This allows for a more effective organization of the training process, the identification of key competencies necessary for achieving successful results, and the creation of a clear structure for skills assessment. Taxonomies help identify knowledge gaps, direct efforts to develop the necessary skills, and ensure compliance with labor market requirements. As a result, companies can increase productivity and competitiveness, while employees gain opportunities for career growth and professional development.

• Firstly, it allows you to track which skills the company has shortages and which competencies will be needed in the near future to solve new work problems—based on this, you can plan training programs.
• Secondly, the taxonomy is an opportunity to optimize and simultaneously personalize training, selecting the right resources for the roles that need them most.
• Thirdly, the taxonomy ensures transparency in the assessment of both individual employees and entire areas.

In the context of global uncertainty facing businesses, experts recommend focusing on training current employees instead of searching for new personnel. In this context, a skills taxonomy appears to be an effective tool capable of solving many emerging problems. However, despite its advantages, this solution is not without its drawbacks and can hide a number of challenges that organizations will face.

A skills taxonomy plays a key role in optimizing the setup and use of LMS and LXP platforms. The ideal scenario is that all courses, eBooks, and other learning materials can be organized by tags corresponding to specific skills. This allows users to quickly find and select the necessary training resources. An effective skills taxonomy not only simplifies the information search process but also promotes more targeted competency development.

Why a skills taxonomy is not an ideal solution

Creating a taxonomy is only the first step to successful knowledge management in a company. Josh Bersin, founder of the research company Bersin by Deloitte, in his articles highlights many challenges that a business may face when building a taxonomy. He emphasizes that a simple skills inventory doesn't always produce the desired results. A poor understanding of employee needs and a lack of a clear strategy can make this process ineffective. It's important to ensure the taxonomy is properly integrated into the overall knowledge management system to ensure it truly delivers value and drives business growth.

When connecting your LXP, you may encounter promises of 20,000 skills, but it's important to be cautious. Many of these skills are presented as isolated words, which can be misleading. They often lack the necessary context to understand how these skills are applied in practice. Instead of being overwhelmed by quantity, focus on the quality and applicability of the skills presented in your professional field.

The expert gives an example of a skills taxonomy he observed at a large bank. This taxonomy used terms such as the Java programming language, Oracle software, and the Microsoft Office suite as skill names. Such vague wording doesn't provide a clear understanding of actual competencies. For example, while I may know how to back up an Oracle database, that doesn't mean I have complete knowledge of all the system's features and capabilities. Therefore, it's important to more precisely define and describe skills to ensure clarity and effectiveness in assessing professional competencies.

Creating a taxonomy is a complex task, especially given the wealth of information it must cover. Unifying data can be extremely difficult, and even within a single company, the names of different skills can cause disagreement. This process requires careful consideration and analysis. Josh Bersin emphasizes that there are two main approaches to developing a taxonomy.

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Creating a team to develop a skills taxonomy is the first step, but this approach can be lengthy and risky. Working with business units to agree on the language and structure of the taxonomy can lead to delays and problems. Without practical testing of skills, there is a high probability that they will require revision, which will require a significant investment of time. A different approach is recommended: first focus on a specific problem. Based on this problem, you can develop part of the taxonomy, initiate the design and management process, and determine the most effective tools for achieving results. This method will allow for faster adaptation to change and minimize risks.

A situation arose at American Express that clearly illustrates the importance of correctly classifying employee requirements. At some point, it was realized that the customer acquisition and support departments needed hospitality skills rather than standard support skills. This led the company to begin hiring employees with experience in large hotel chains, such as Ritz-Carlton, instead of traditional salespeople. This approach significantly improved customer service and improved the overall atmosphere of interaction with the company.

Josh Bersin emphasizes that skill taxonomy is closely linked to the overall workplace architecture. In an environment of rapidly changing skills, the number of roles within a single company can vary significantly. Attempts to create new positions for every emerging skill often prove ineffective. The expert suggests a simpler approach. For example, at one internet company, all software engineers share the title of "engineer." Although they perform different tasks, the distribution of roles and responsibilities occurs at the management level, and this is not reflected in the job title. This approach allows for a focus on the company's real needs and flexible adaptation to changes in the labor market.

According to Bersin, a skills-based approach in business is becoming a necessity. With the advent of artificial intelligence-based platforms and new principles for building them, implementing this approach is becoming significantly easier. The use of technology, combined with a focus on employee skills development, allows companies to adapt to rapidly changing market conditions and improve their competitiveness.

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McKinsey experts have announced the beginning of a skills revolution, which poses new challenges and opportunities for the education system. This transformation highlights the need to adapt curricula to the demands of the modern labor market. Education should focus on developing critical thinking, creativity, and digital competencies. In the context of rapid technological progress, traditional teaching methods are becoming insufficient. Educational institutions must integrate relevant skills and knowledge to prepare students for future challenges. Thus, the skills revolution requires a revision of educational strategies to meet modern standards and the needs of society.

How to Implement a Skills Taxonomy

When developing a taxonomy, it is important to adhere to a systematic approach, regardless of the chosen principle. Mark Osnick offers a number of recommendations for those who are just beginning to think about creating a taxonomy in their company. First, you need to clearly define the goals and objectives you want to achieve with the taxonomy. This will help you create a structure that meets your business needs.

The next step is to analyze existing data and content. Understanding which categories and subcategories are already in use will help you avoid duplication and simplifying the structure. It is also important to involve key personnel in the development process to consider different points of view and ensure consistency.

Don't forget that your taxonomy is flexible. It should adapt to changing conditions and new data. Regularly reviewing and updating the structure will help keep it relevant. Ultimately, a well-developed taxonomy will not only improve the organization of information but also increase the efficiency of your company.

• Get support from senior management. The value of a skills taxonomy can be communicated through potential business benefits. This is especially important since implementing such an approach will require investments in both human and technological resources.
• Set priorities. Since many people are involved in creating a taxonomy, it is very easy to get lost and rely on "yesterday's technology." "A skills taxonomy must be future-proof, market-aligned, and capable of evolving and changing in real time with the business," the expert emphasizes.
• Analyze roles and skills. During the process of creating a taxonomy, it may become clear that both are already outdated. Therefore, Mark Osnick, like Josh Bersin, calls for simplifying the lowest categories and minimizing skill sets, especially for outdated positions. Furthermore, they must be stored in an easy-to-use format—a standard spreadsheet is unlikely to be of much use today; modern LMS systems are much more suitable.
• Consider a management system. Who exactly will make changes to skill profiles and the taxonomy? Who will manage them and coordinate all changes? Can they be updated in real time? These questions must be answered in the early stages of design. "As organizations change to meet business needs, they can quickly revert to a situation with redundant skill definitions and structures that don't provide much business value," the expert emphasizes.
• Conduct a diagnosis. Once the taxonomy is in place, it's worth assessing employees' strengths and weaknesses. It's important not to make such an assessment "mandatory": ideally, present it as an opportunity to reflect on growth within the company and offer training recommendations.
• Integrate the approach into training. HR and L&D processes should be based on the taxonomy: that is, job descriptions, career plans, and personnel decisions cannot contradict the taxonomy. Training should be transparent, flexible, and always accessible so that everyone has the opportunity to obtain the necessary learning resources in a format convenient for them.

Reading is an important aspect of our development and education. It helps broaden horizons, improve analytical skills, and increase knowledge. Reading books, articles, and other materials helps deepen your understanding of various topics and fields. It's important to choose quality sources to ensure you have reliable and up-to-date information. Furthermore, reading helps develop imagination and critical thinking. A reading habit builds confidence and self-expression, making it an integral part of personal growth. Therefore, it is worth devoting time to reading and enriching your knowledge.

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