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1、the skillsrevolution is nowInsights and benchmarks to accelerate a skills-basedtransformation in your companyThe skills revolution is now2Evolvinghow we use,validate,developandreward skills is being integrated in business practices.How that looks for your companydepends on yourstrategies.The 2022 Pa

2、y for Skills Survey results are in!Gain insights to accelerate the skills conversation in your company and benchmark your progress against your peers to get started.In Mercers 2022 Pay for Skills Survey,more than 650 organizations from around the world shared their successes and challenges with attr

3、acting,retaining,and rewarding the desired skills that advance their business strategies.Approximately half(47%)of companies report that they are yetto developan approach toclassifyingskills at any level of their company,which is a minimal change since 2021.This key statistic supports Mercers experi

4、ence that many companies arestill at the very beginning of theirskills journey.What is driving organizations to prioritize skills-based talent strategies?With more companies prioritizing skills over education(e.g.,IBMs well-documented Skills over Degrees initiative),more companies needto develop pay

5、 for skills capability.45%of companies report that their need for in-demand skills is higher than for others,making talent search(and retention)even more challenging.As the need for certain skills takes the forefront in the hiring process even sometimes ahead of education or experience skills-based

6、paypractices are often deployed to attract new talent.Even though organizations are assessing skillswith a view to achieving that goal,over 44%ofcompanies report that no formal skills-basedrewards are in place to recognize ongoingskill development.Of those organizations that do incorporate skills-ba

7、sed pay,57%indicate that they are notconsidering implementing complementary skills-based programs at this time.Are companies over-focusing on skills to hire and under-focusing on building and retaining the skills that will advance their business priorities?The skills revolution is now3Fivekeyquestio

8、ns being addressed byorganizationswho are leading the transformation toa skills-focused talent strategyWhat skills do we need and how will we incorporate a skills taxonomy into our job architecture?What skill proficiency level do we expect for each role?How do we assess the skills that will drive ou

9、rbusiness forward?How will we reward for top skills?How will we operationalize our skills-based strategy?Is it more common to build a custom skills taxonomy or adopt a taxonomy from a skills-based provider?Of the 53%who have some form of skills taxonomy,82%report having an in-house customized skills

10、 taxonomy,with the remaining 18%using eitheran open source skills framework or one purchased from a third-party provider.This implies that 44%of all respondents have developed an in-house customized skills taxonomy to manage at least a portion of their workforce.Given that incorporating skills into

11、an organizations talent strategy has only risen to prominence in the last few years,the data suggests that a tremendous amount of work has been done in a relatively short time to develop company-relevant skills taxonomies.Clearly,leading organizations recognize thata foundational infrastructure is t

12、he core to the development of effective skills-based hiring,skills-based learning and internal skills development.Do you wonder if you need to implement a skills-based approach only for certain job families or across the entire organization?If so,youre not alone,as 55%of the companies that have a sk

13、ills taxonomy track skills acrossall employee groups,while distribution across job families varies in organizations that have a more focused approach.Notably,there is less interest in tracking skills inProduction,Supply Chain and Creative&Designjob families.It is likely that tracking human skillsin

14、traditional manufacturing and supply chain isbecoming less of a priority as automation and robots take over more of the roles in these families,while many of the skills associated with roles that design and manage automation and robots are often listed as“in demand”.3The skills revolution is now4Mon

15、itoring skills across allemployee groups is a sound,competitive strategy.While the data shows that only half of responding companies track skills across all employee groups,todays hot skill or hard-to-hire role can quickly evolve and affect varying roles in your organization.“I am in the market look

16、ing for skills,but tracking trends in any formal wayis a real challenge.”Despite indications that half of companies do not have a skills taxonomy in place,a majority of companies(69%)report that they monitorthe market demand or availability of skillseither informally(60%)or formally(just 8%).Informa

17、l monitoring is by far the dominant market practice,suggesting that many companies are still building their familiarity withthe skills-tracking platforms and the related datasets that have emerged and are startingto mature.This implies that many companies,particularly given the increasing ubiquity o

18、f skills taxonomies,are still struggling to leverage skills taxonomiesfully,especially with respect to more technicaldata-based applications and external vendor skills data and platforms.The%of companies who report formally monitoring the marketdemandfor skills has remained static over the past 2 ye

19、ars(9%in 2020vs 8%in 2022)4The skills revolution is now5Proficiency scales and skills assessments remain a mainpriority and are still highly subjective“We are in the nascent stageof looking for skills rewardssolutions,as we first need toclassify and identify skills in terms of proficiency levels to

20、movetoward skills rewards solutionsthat makes sense to us.”Developing a proficiency scale,defining the expected proficiency of a skill per role,and usingan objective process to assess each employees skill proficiency relative to the scale enables skills-based pay to be objective and deployed in a fa

21、ir manner.The majority of respondents(78%)with a skillstaxonomy have a defined proficiency scale.Thisstrongly suggests that the creation of skills proficiencies definitions is typically eitherperformed as part of the skills taxonomyimplementation or the next logical post-implementation step.Although

22、 proficiency scales area priority,there is absolutely noconsensus in the market on theoptimumnumberofproficiency levels,with a fairly evendistribution between companies that report three levels(9%),fivelevels(7%),fourlevels(6%)andsixormorelevels(6%).Interestingly,a noteworthy(28%)portion of responde

23、nts report that the number of proficiency levels varies either by skill or by job family which is equivalent to the total percentage ofcompanies who have a fixed number of levels across the whole population(28%).Clearly,when it comes to proficiency levels,companies overwhelmingly opt to design thems

24、ubjectively,which may create a barrier to defining proficiency levels based on market benchmarks.When asked whether companies assess talent against the relevant skill expectation,the most common answer was no(47%)followed by yes,but only as needed(22%).Among companies that do assess for proficiency,

25、the most commonplace approach was a combination of employee self-assessment and manager validation(62%)followed by manager assessment(40%).Over one third of companies report theassessment to be part of year-end evaluations orcareer development,with only 8%indicating thatthey assess their employees o

26、n a continuous basis.Related to this,only one fifth(21%)of companiesreport using a formal proficiency assessment tool a finding almost certainly linked to the fact that such tools are relatively new to the world,potentiallychallenged by the level of customization seen inthe marketplace.Given that th

27、e topic of assessment often enters theskills narrative due to the desire to have a strong,formal method to perform assessments across employee populations,having an assessment toolthat is tied to the proficiency scales is criticalto using proficiency ratings in an objective,quantitative fashion.This

28、 seems particularly pertinent given that over three quarters of companies(77%)indicate that individual employee ability is the most significant contributing factor to proficiency level.However,with 82%of companies building their skillstaxonomy as a custom framework,it would seem that assessment tool

29、s would also have to be at minimum highly configured or perhaps even custom built.In lieu of such deep platform flexibility today,assessment remains a predominantly subjectiveprocess consisting of self-assessment,managerassessment and/or 365-style reviews and correspondingly is possibly at risk of h

30、uman errors in judgement and individual subconscious biases that are inherent in such approaches.The skills revolution is now652%42%29%27%30%Strategic necessityof revamping the organization key technical skill setsEntry in new markets and/or development of new services/products that requires a techn

31、ical skill set enlargementAggressive strategic policy of hiring new high-end professionals(e.g.,Al and digital)Explicit goal present in the strategic planImplicit need linked to strategic goalsStrategicpurposes forusing skills-based payPay for skills is important strategically but difficultto operat

32、ionalize acrossthe organizationWhat is driving skills-based rewardsin pay?In a continuation of the trend seen in our 2021 results,almost exactly half of respondentsindicated that their leadership views skills-basedpay as either important or very important to ensuring optimal compensation plans at co

33、mpanies.This aligns well with the data thatconfirms over half of the respondents have established an approach to classifying skills.For the vast majority(80%)of companies,the main objective when linking rewards to skills isattraction and retention.Nearly half ofcompanies(46%)do not differentiate rew

34、ards forspecific skills,versus 40%that differentiaterewards for hard skills,33%for leadership skills,24%for soft skills and 24%for qualifications.It is perhaps unsurprising that the hard skills are the most common skill type upon which reward differentiation is based as they areoften tied to specifi

35、c technical jobs or functionsand are easier to objectively assess than soft skills.For example,high-demand,high-valuesoftware programming languages such as Python and R fall into this skill category.The skills revolution is now7Of the 41%of companies that link rewards fornew joiners to their reporte

36、d skills,89%do soin their starting salary,equating to 36%oftotal respondents.For companies that use a pay for performance approach,and with respect to their three-year plan,37%indicated that critical skills will give access to higher pay levels but performance will still be the main driver of succes

37、s,versus 31%of companies indicating that salary reviews will be driven equallyby both factors.18%of companies indicated that skills-based pay will be used on only a limited or as-needed basisduring the salary review process,and only 4%ofcompanies expect that skills-based pay will becomethe prevalent

38、 driver for salary reviews,which shows that performance will continue to be a key driverof pay.Traditionalpay forperformanceapproaches arenot goingawayanytime soon,but manyof the more skills-mature companies arelooking for ways toweave skills into their established performance-based approaches.Signi

39、ficantly,44%of companies report that they do notlink rewardsto the ongoing development of skillswhich particularly for those who do factor skills into pay at time of hire has the potential to create equitygaps in the organization overtime.58%Too complex/too muchchange management49%Requires managemen

40、t developmentBarriers to skill-based approach to pay49%Difficult to manageThe skills revolution is now8“We recognize the need for a skills-based approach in the future but it is a long roadwith a lot of change management to get to the finish line.”While the majority of companies understand the need

41、to incorporate skills into their strategy to compete for toptalent,operationalizing skills programs presents manybarriers to launch with minimal best practice guidancefrom peers.In assessing overall ability to operationalize a skills-based approach,companies feel most confident about their ability t

42、o pay for the skills that they need(39%ratingthemselves as effective or very effective)and their ability to communicate skills expectations with individuals(34%giving themselves the same rating).On the flip side,companies feel least confident about their ability to track the availability of internal

43、 skills(42%rating themselves as not very effective or not effectiveat all),followed by their ability to track availabilityof skills in the external market(39%).Of companies that have a skills taxonomy in place,less than half(41%)have a(purchased or in-house)technology that enables usage,collaboratio

44、n and easyupdates which is nearly identical to our datasince 2020.Of the group with in-house technology,43%use Microsoft Excel or an internally-developed database.The data confirms that organizations are still assessing the ROI in skills enablement technology investments and that platform vendors ar

45、e still innovating to find a true product-market fit.Operationalizing a skills-based approach48%HR Systems35%resumes and CVsFour key takeaways from the 2022 Pay for Skills SurveyAround half(47%)of companies report that they are yet to develop an approachfor classifying skillsAmong companies who have

46、 a full or partial skills taxonomy,there is no consensus around the optimum number of proficiency levels;indeed most companies reportusing different numbers of levels in different functionsIndividual skill proficiency assessment currently remains a predominantlysubjective process,and represents a si

47、gnificant opportunity areaIts not either/or,its and.the challenge is to incorporate pay for skill elements intothe rewards program to strengthen the ability to attract,build,and retain critical skillswhile maintaining a performance driven cultureThe challenge is to enhance your existing program to i

48、nclude pay for skills to strengthen your ability to attract,build and retain critical skills while maintaining a performance-driven culture.The skills revolution is now9Only 6%of respondents report utilizing a vendor technology to assess skills.While many hurdles exist foran organization to adopt a

49、skills-based reward strategy,the traditional job will eventually be replacedwith career frameworks designed to optimize the skills an organization needs to achieve its mission.And when the task at hand seems overwhelmingly impossible,completely replacing your existingprogram is not required.Where do

50、es the most up-to-date data about your skills exist,if anywhere?6012813-CR 2023 Mercer LLC.All rights reserved.At Mercer,we believe in building brighter futures.Together,were redefining the world of work,reshaping retirement and investment outcomes,and unlocking real health and well-being.We do this

51、 by meeting the needs of today and tomorrow.By understanding the data and applying it with a human touch.And by turning ideas into action to spark positive change.For more than 70 years,weve been providing trusted advice and solutions to build healthier and more sustainable futures for our clients,colleagues and communities.Welcome to a world where economics and empathy make a difference in peoples lives.Welcome to brighter.Learn about Mercer Skills-Edge Suite on