Skills-based Talent Management: Competency Frameworks 2.0 or a Genuine Step Forward?
In recent years, “skills-based talent management” has been pitched as the future of managing and developing people. The concept sounds compelling:
- Identify what skills you have in your organisation
- See where the gaps are
- Recruit, develop, and redeploy to fill them
- Stay agile in a fast-changing market
It’s a great story. But for most organisations, the reality has been patchy adoption and limited impact.
Why Skills Strategies Haven’t Gone Mainstream
Despite the hype, most companies are struggling to make skills data work in practice. Here are the four big reasons:
1️⃣ Skills classifications are too broad, subjective, and overlapping
“Communication” might mean persuasive writing to one person, public speaking to another, and active listening to a third. Multiply that by hundreds of skills and you have a dataset that’s impossible to interpret consistently.
2️⃣ Self-perception is uncalibrated and over-optimistic
Ask people to rate themselves, and you’ll find more “experts” than actual expertise. Without a baseline or external validation, you’re not measuring skills, you’re measuring confidence.
3️⃣ Skills data is hard to maintain
Getting employees (and candidates) to enter, update, and keep their skills records accurate is a challenge. Without incentives and clear value, completion rates plummet, and data reliability suffers.
4️⃣ HR capability gaps in data literacy
Even when skills data exists, many HR teams aren’t equipped to analyse it meaningfully or translate it into actionable talent strategies. Without these capabilities, the dataset becomes another HR system feature that sits unused.
A More Practical Approach
If this all sounds familiar, it’s because competency frameworks promised much the same thing over the last 20 years and often failed to deliver. That doesn’t mean the idea is bad. It means we need to design for simplicity, clarity, and adoption from day one.
Here’s a more practical approach:
- Start small – Pick less than 20 core skills for your most critical roles.
- Define them clearly – Avoid ambiguity so everyone knows what “good” looks like.
- Assess consistently – Use both self-assessment and objective evaluation for candidates and employees.
- Integrate into workflows – Make skills part of hiring, onboarding, performance, and learning, not a one-off survey.
- Build from there – Expand your skills taxonomy once you’ve proven value and created adoption momentum.
Is This Really Different From Competency Frameworks?
In principle, not much has changed: we’re still talking about defining what good looks like and measuring against it.
The difference today comes from:
- Agility – Skills definitions can be updated quickly to match changing needs.
- Integration – Modern tools such as Workday, Eightfold, SAP Successfactors and Oracle HCM can embed skills data into daily decision-making rather than sitting in a PDF on a shared drive.
- Market insight – Skills taxonomies can link to external labour market data, making them more relevant to future business needs.
Still, the same pitfalls apply. Large, vague, and static frameworks will fail now just as they did before.
Should Companies Invest?
Only if they are prepared to:
- Be focused – Resist the urge to cover every possible skill.
- Be clear – Avoid ambiguity in definitions and assessments.
- Be capable – Equip HR and leaders with the data literacy to make the numbers matter.
- Be persistent – Keep the framework alive in performance, recruitment, and development conversations.
The concept is not broken, the execution often is.
Get the design right, invest in capability, and a skills strategy can genuinely sharpen hiring, speed up development, and future-proof your workforce.
