Everything You Need To Know About a Skills Taxonomy

The workforce is continuously evolving, as is the landscape of jobs and skills. The new era of work brings new jobs as well as the need for new skills. The days when you could look at employees and see their job descriptions and nothing more are long gone. A skill-based approach to workforce management is a must. And that requires a skills taxonomy.

What is a skills taxonomy?

A skills taxonomy is a structured list of all the skills in your business. It is usually a hierarchical structure, where each skill is classified into different categories based on its complexity or importance. This process helps organizations quantify the scope and variety of skills across all departments, roles, and seniority levels.

What the skills taxonomy looks like, and how classifications are made, depends on the specifics of each organization. One visual representation of a skills taxonomy is a tree, where each “main” skill has various sub-skills. Other representations label these levels as groups or clusters.

A skills taxonomy is essential for any company wanting to have a skills-based approach to workforce management. It can show you existing skill gaps and can be a valuable tool in internal mobility programs and succession planning.

What is the difference between skills ontology and skills taxonomy?

Skills ontologies and taxonomies are both used in business to organize and categorize skills. The main difference between the two is in the way they categorize these skills and the level of detail.

A skills taxonomy is usually very detailed and uses a hierarchical approach to categorization. The categories are predefined and strictly related to the needs of the organization. As a result, the categories in a skills taxonomy can change depending on the shifts that happen within a company. 

A skills ontology also categorizes skills, but these categories are not as strictly related to the needs of the organization. Ontologies offer more insights into the relationships between skills and usually come with a more simplified, universal look across the organization.

In many companies, you’ll see skills ontology represented as a graph that highlights the relationships between the various skills.

Elements of a skills taxonomy

The elements of your skills taxonomy will depend on your organization. But there are some universal elements that will be present in all skills taxonomies.

1. Skill hierarchy

Skills taxonomies are, more often than not, hierarchical. That offers a great opportunity to group skills based on various criteria and can help you get a better view of existing gaps. The first level or category is usually very broad. As you go down the hierarchy, categories become more specific.

Let’s look, for example, at a skills taxonomy for an IT department. “Information technology” is the broadest skill and will be at the top of your tree hierarchy. The next levels could have hardware and software skills, respectively. 

The hardware skills could be further divided into the next level and contain skills related to repair, maintenance, or installation and configuration. The software skills can contain various levels relating to web development, programming, operating systems, and more.

2. Skill descriptions

Defining or describing each skill adds clarity to your taxonomy. Create detailed descriptions that offer a clear understanding of what each skill entails, even to those who don’t have those skills themselves.

3. Skill mapping

If you want to create more than a simple database of skills, you’ll need skill mapping, a process that allows you to identify the specific skills each person in your organization has. After a thorough job analysis, you’ll be able to create a simple visual representation of all the skills in the company. Or better yet, leverage a skills intelligence tool that can ingest your people data from multiple sources to give you a complete view of your workforce skills.

Look at employees, roles, geographic locations, and more, and map this data to your skills. This will allow you to discover skill gaps and can be useful to internal mobility, upskilling, or reskilling programs.

Where can I find data for my skills taxonomy?

A skills taxonomy can contain hundreds, if not thousands, of skills. Compiling a comprehensive list can be a challenge, especially if you start from nothing. The first time you create a skills taxonomy, it might be a good idea to start with a single department, instead of trying to include the entire company all at once.

Here’s where you can find skills data.

Skill libraries

A great place to start are skill libraries such as O*NET. These libraries come with thousands of skills that you can browse and use in your taxonomy. They’re easy to navigate and are great for anyone who’s new to working with skills taxonomies or looking to create very detailed taxonomies.

Industry associations or skill management vendors

Industry associations and skill management vendors often compile lists of skills needed for various jobs. Sometimes they even create skills taxonomies for their customers. These make a fantastic starting point if this is your first time creating a skills taxonomy.

Use people analytics and skills intelligence

The first question you’ll need to answer that will help you start your taxonomy is “What skills do I have in my company?” Job descriptions and resumes may come to mind. But an even better starting point is people analytics. 

Visier’s standardized jobs and skills ontology consists of 3,300 standardized occupations and over 14,000 standardized skills across 27 industries in more than 100 languages. Using skills intelligence, you can instantly unlock unparalleled insights into your employees’ skills and transform your HR practices to be skills-first overnight.

With people analytics, you’re able to collect HR and organizational data, including skills, and turn it into actionable insights. It’s the perfect way to see what skills people in your organization have. 

But it can take you one step further by helping you with skill mapping. For instance, if you use skill libraries and select hundreds of skills that you know your organization needs or could need, you’ll have to map them to your workforce. People analytics makes this process a lot easier since your HR data is already organized and ready to use.

4 benefits of skills taxonomy for HR and managers

A skills taxonomy is a must if you want to adopt a skill-based approach to business. Here’s how HR professionals and managers can take advantage of it.

1. Improved hiring process

When you have a new position to fill, you’ll often look at the external market for people whose skills match the job description. That’s not inherently bad, but there are more effective ways to conduct the process.

For example, let’s assume you’re looking for a software developer. You know the skills they’ll need include C++, Relational Databases, and the Linux Operating System. Instead of immediately looking outside of the company, analyze your skills taxonomy first. 

• Are there people in the company who already have those skills? Could you relocate one of those people to this new position you’re looking to fill?

• Is there someone you could train?

• Are there other more pressing skill gaps in the company that should take priority over the ones you’re currently looking at?

• Could you expand the scope of the software developer position to cover more skills you need?

Without a skills taxonomy, you will face serious challenges when answering these questions.

2. More effective internal mobility and succession planning programs

Lateral and vertical mobility inside a company is a win for both employees and the organization. Your employees will feel happier and will be more engaged knowing they have opportunities to advance and even change careers within the same company. And you will have an easier job filling new positions thanks to an active internal talent pool.

Skills insights show you who has what skills, where gaps exist, and who could help fill them. You don’t have to waste time second-guessing every time you need a new skill. One look at your taxonomy can show you if you have employees who can do that job, have related skills, and could switch positions with some minimal training.

3. Create better learning and development programs

Without learning and development (L&D) programs, your employees and your company will eventually stagnate and even become less productive. Plus, employees today want companies that give them opportunities to grow and learn new things all the time.

But you don’t want to invest in L&D just for the sake of saying you have such a program. That could improve satisfaction and even retention for a while. But long term, it will be nothing but a waste of money.

A skills taxonomy will help you avoid such situations by showing you exactly what skills you should help your employees develop. You can optimize your programs and save costs by selecting the right skills and the right people to train.

4. Improved talent management

A skills taxonomy helps you create a standardized way of describing competencies and skills. It offers a clear view of what the talent in your organization can offer and it highlights potential skill gaps. 

By doing that, it supports HR professionals’ efforts to effectively manage talent, create learning and development opportunities, and maintains internal mobility and succession programs.

When you have a good understanding of the skills in your organization, it’s easier to set performance goals that are challenging enough to encourage top performance, but not unattainable or discouraging. This will boost productivity, engagement, and satisfaction and can be a win-win for both employees and the company.

The bottom line

A skills taxonomy is the first step towards a more resilient business and a skills-based approach to work. It can support you in creating an effective talent acquisition program, a smoother onboarding process, and a shorter time to productivity. 

It is also a must-have tool when you want to create effective internal mobility or succession planning programs or increase retention and engagement.

On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices like how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.