Skills-based Organizations: what is the state of play in France?

Placing competence as the main determinant of performance is not a new approach. McClelland, psychologist and professor at Harvard, developed in 1973 the concept of”Competency” to represent all the intrinsic characteristics of an individual (knowledge, character traits, know-how, etc.).

His objective at the time? Exceed the criteria of supposed intelligence or even the diploma to obtain a more equitable method of allocating resources.

50 years later, 12 CAC40 companies consider themselves to have adopted the skills-based organization as a business model.

In reality, The profession remains the central anchor of the organization, an architecture that works when skills are relatively stable, The only catch : it is no longer the reality. Among our panel of 454 HR professionals, 91% consider that at least one of the three factors is particularly impacting on a daily basis. Here is the ranking of the 3 drivers of current transformations:

1. Artificial intelligence (AI) represents 34% of the global impact, marking its dominant role in the transformation of organizations.
2. Digitalization follows in second position with 31% of the global impact, underlining its continuing importance in current strategies.
3. Environmental awareness Complete this ranking with 25%, reflecting growing interest, but still lagging behind in relation to technological factors.

In this article we quickly detail the benefits from a financial point of view, the different levels of maturity that you can take as a benchmark and, finally, how to get started.

SBO and organizational performance

The current context is one of incessant technological breakthroughs, strong regulatory pressures and incomplete digitalization. This situation leads 45% of CEOs to consider that their company will not be viable in 10 years if it does not change the model, a figure up by 6% in 1 year (27th PWC survey with business leaders).

Performance now rhymes with resilience, rapid adaptation to disruptions, and the expectation of the skills needed to maintain a competitive advantage.

We questioned the comparative performance of Skills-based organizations (SBOs) and companies that did not adopt this approach, the verdict is clear:

Businesses that have made the transition to this configuration have increased earnings per share by 147% between April 2020 and June 2024, while “traditional” businesses experienced an increase of 24.7%.

In addition, businesses perform better with fewer resources while adapting to ever-changing market conditions. The implementation of an organizational model based on competencies has demonstrated that it significantly improves the performance of the company.

Here we are not going to develop all the benefits already mentioned in detail in our article.”The benefits of an organization centered around skills“.

Overview of the transition to competency-based organization

We identify 5 levels of maturity in the transition to this organizational model. This is a gradual approach for which we offer you this synthetic representation:

First level of maturity: the expressed desire to move towards the SBO

The 1st level consists of the will of the Management to move towards this model. The most obvious benefits are commercial and stock market performance and, more generally, the resilience that it promotes. The vision of some HR Development Directors is to move from job descriptions to “skill packages”.

While job descriptions still exist, it is now a question of breaking them down into the activities and skills necessary to carry them out.

What conditions should be met to make the transition to a Skills-based organization?

To achieve this transition, 3 conditions must be met:

• The expression of a commitment at the highest level of the company
• The sector in which you work is marked by a strong evolution of skills
• The assertion ofa clear strategic project, of an identified and shared challenge

Second maturity level: the company has a robust skills base

The vast majority of companies constitute a reference system of professions to which a library of skills is associated. The challenges are particularly numerous here: heterogeneity of the standards according to the business units, difficulties in allowing employees and their managers to assess themselves objectively, problems of maintenance and the scalability of these frameworks.

This central tool of skills management only makes sense if it is envisaged to carry out a complete mapping, to map both the assets but also the areas of HR development.

At this stage of technological progress, the challenge is to achieve personalization of this instrument based on the ontologies of skills available to solution providers and existing frameworks in the organization, then to increase the frequency of its use by the main actors.

‍

Third stage of maturity: the dissemination of the competence dimension in HR processes

The construction of competency frameworks is, all too often, an activity assimilated to a habit without sufficient operational variation. The competence dimension, in the context of an SBO project, is an integral part of the enrichment of several HR processes.

What HR processes are enriched by the skills dimension?

• All interviews.

Whether it's performance reviews, people reviews, professional interviews. These are central opportunities to feed the competency data through a bipartite evaluation (collaborator-manager) who will reinforce subsequent training or career proposals.

• HR development

In a context of rapid change in skills, the mapping of skills gaps highlights development priorities. Identifying critical skills makes it possible tooptimize training catalogs according to real needs : each skill is linked to adequate training

• Setting goals

In a competency-based organization, How to achieve goals is as important as the results themselves. This creates a stronger alignment between expected performance and talent development. For example, at Nexans, managers aim to develop the skills of their employees in a spirit of contributing to final results.

• Remuneration and recognition

Retribution is considered in a completely different way: it is based more on the skills portfolio employees rather than on their workstations. Increases and bonuses are directly linked to the acquisition and development of strategic skills, which encourages continuous improvement and ensures fair remuneration, in line with the value of the skills brought to the company and performance. The new European directive on wage transparency reinforces this objectivity that the SBO provides.

• Career paths

Professional developments are no longer determined simply by vacancies, but by the skills developed and the ambitions of employees. This process allows you to create unique career paths, more in line with the expectations of talent diversification.

‍

Fourth maturity level: facilitating workforce redeployments

At the fourth maturity level, companies are fully capitalizing on skills management to orchestrate agile reorganizations and staff redeployments. Proactive talent management is based on a fine skills approach, making it possible to optimize internal resources and minimize the costs associated with external recruitments or departures.

Example: strategic redeployment at Natixis

Faced with the challenges posed by automation and offshoring opportunities in the financial services sector, the BPCE Group, via Natixis, has chosen an innovative path. Where companies often adopt a downsizing approach followed by massive hires, generating considerable costs, Natixis has focused on three strategic alternatives:

1. Staffing one position out of two with internal talent, compared to one in four in traditional approaches.
2. Reallocate 50% of skills internally, compared to only 10% in conventional models.
3. Accelerate the allocation of resources to value-creating jobs through targeted reskilling initiatives.

These successes were possible thanks to a fine skills mapping and mobility areas, by analysing the differences between current skills and those required for tomorrow's jobs. This process has been reinforced by a better understanding of aspirations and motivations of employees, making transitions more fluid and adapted to individual ambitions.

Fifth maturity level: Integrating skills into corporate culture

At the ultimate stage of maturity, skills are at the heart of corporate culture, influencing all HR practices.

1. Leadership by example
   Leaders are actively involved in their own development and are leading by example through initiatives like the”Expeditions Journeys“, encouraging a culture of continuous learning.
2. Endorsements and recognition
   The skills of employees are regularly recognized informally by their peers, reinforcing a dynamic of support and collective development.
3. Accountability of employees
   Each employee is responsible for their own development, with dedicated time slots to train and acquire new skills.
4. Horizontal mobility and diversity of experiences (Mazars example)
   Mazars encourages mobility with start-ups, skills sponsorship or even the encouragement to create your own self-employed business. Horizontal evolution is preferred to vertical evolution. Internal mobilities are always successful thanks to the numerous “Live my life”. Finally, no opposition to mobility is possible on the part of managers.

French companies and the skills-based model

Concrete examples of international companies are available in the literature, including Unilever, Microsoft, Orsted (energy). We also note that companies that have had to make a significant change in business model, such as Toyota or Volvo, have fully adopted this organizational model.

Which French companies have adopted the competency-based organization model?

Here is the list of French companies declaring themselves SBO:

• saffron
• LVMH
• airbus
• Vivendi
• Societe Generale
• Crédit Agricole
• Orange
• veolia
• TotalEnergies
• Natixis
• Stellantis
• Schneider Electric
• Capgemini Invent

‍

How do I move forward to SBO configuration?

To move towards this pattern, we have prepared several initial questions to diagnose your current situation, we encourage you to complete this full audit thanks to our free tool.

1. Are the required skill levels indicated in my framework and shared with employees and managers?
2. Do I know the skills gaps at the individual and collective levels?
3. Do employees express their desire to develop certain skills, and am I in control of this information?
4. Am I streamlining my training offer based on the skills to be developed and the emerging skills in my sector?
5. Do I decide between internal and external recruitment based on a pool of skills that can be mobilized?

‍Conclusion

‍The transition to a competency-based organization is not only a trend, it is a real driver of transformation for those who dare to rethink their model. As pioneers such as Natixis, Safran and LVMH have shown, integrating skills at the heart of the strategy not only reinforces performance, but also navigate with agility in a constantly changing environment.

However, This model is not necessarily suitable for all businesses. That's why asking the right questions and diagnosing your current situation is critical. Take the time to ask yourself: What is the status of your structure in this transition? Are you ready to capitalize on your talents and anticipate tomorrow's challenges?

We invite you to do it now a complete audit with our free tool. This is an opportunity to assess your maturity level and see if moving to a Skills-Based Organization is the key step in propelling your business into the future.