What Is a Skills Taxonomy and Why Do You Need It?

Do you feel like it’s getting harder to hire the right people? You’re not alone: 61% of U.S. business leaders say it’s a growing challenge to find and attract top talent right now. New studies also suggest that solely looking at the number of years a candidate’s been working in a role can be a flawed predictor of whether they actually possess the core competencies listed on the job description.

What’s going on? More to the point, what can your organization do about it? What initiatives can you take?

According to the 2023 Workplace Learning Report, skill sets for jobs have changed by about 25% since 2015. By 2027, that number is expected to double. There’s a widening gulf between the skills hiring managers are looking for and the skills prospective hires are promoting.

To solve this problem, employers need to take two steps:

1. Do a better job of identifying the skills required to do the jobs they’re hiring for
2. Make sure the people they hire have those skills

The most effective way to accomplish both is to develop a skills taxonomy for each role in your organization. Below you will find everything you need to know about skills taxonomies, including the benefits of a skills taxonomy and why they’re so important in today’s labor market:

What is a skills taxonomy?

Skills taxonomies are skills inventories that provide an exhaustive listing of the skill sets relevant to your organization and industry. Taxonomies encompass all types of hard and soft skills, from interpersonal communication to more technical skills like Power BI. Skills taxonomies offer a skills-based approach to identifying, acquiring, and managing the core competencies that make your business successful.

Why does my organization need a skills taxonomy?

Keeping a skills taxonomy updated for each role in your organization will help you understand exactly what each role requires and where your organization’s skills gaps may lie. Not only will these skills taxonomies make writing accurate job descriptions and parsing the labor market for qualified candidates easier, but they also allow you to take a concrete, skills-based approach to your upskilling and reskilling programs.

As the skill sets required for many jobs continue to change, skills taxonomies will only become more important. Nearly nine out of ten (89%) of learning and development (L&D) professionals agree that keeping track of skills data to proactively upskill and reskill current employees is essential to successfully navigating the evolving future of work. 

By implementing a skills taxonomy for each role in your organization, you will find it is far easier to achieve:

• More accurate assessments of job-candidate suitability
• More aligned and strategic reskilling and upskilling programs for each role
• Heightened transparency and clarity around internal mobility plans for each employee
• More intentional workforce planning
• Reduced systemic bias by introducing objective guardrails on performance reviews and promotions

Overall, building skills taxonomies is the first step toward a more deliberate and organized skills-based approach to the future of work. Creating them now will help you understand the next steps you need to take to create a workforce prepared for the big changes that may be just around the corner. 

How do you build a skills taxonomy framework?

Building a skills taxonomy framework for any given position can be surprisingly simple with the right methodology. There are just a few steps to follow:

1. Catalog the skills necessary for the role

Although many roles will share certain core competencies and soft skills, it helps to start with skill sets that are more specific to a position and then get more general. A very high-level skills inventory broken out for a software engineer and a salesperson role might look like this, for example:

• Software engineer skills inventory: coding, debugging, Q&A, specific coding languages, communication, and teamwork
• Salesperson skills inventory: CRM, sales, product knowledge, communication, and teamwork

While these skills inventories may contain the broad skill categories required for each role, they clearly aren’t an exhaustive breakdown of everything a professional in these roles will need to know. To get closer to a granular summary, you need to break each skill you listed down into clusters.

2. Determine skills clusters within main skill categories

Skills clusters are groups of skills that are organically related to each other and to the skill category you organize them under. Clusters give a complete picture of success in a particular role by illustrating the more specific mix of different hard and soft skill sets required to perform a job’s function in a truly successful way. 

Examples of skills clusters might include:

• Teamwork: collaboration, conflict resolution, communication, and team building
• Sales: lead generation, customer service, and communication
• Debugging: programming knowledge, error analysis, problem-solving, and persistence

Building out skills clusters is a particularly important step to making your skills taxonomies useful for employees’ upskilling and reskilling opportunities. Clear, detailed clusters can help give workers a sense of the specific skills they need to develop or build upon, either in their current role or if they’re planning a transition to another position at your company.

3. Visualize the skills taxonomy as a skills inventory hierarchy and prioritize

Think of skills taxonomies as Venn diagrams or idea clouds that show the overall picture and key intersections. The “highest level” of your skills taxonomy are the skills you identified in step one: For salespeople, it could include “CRM, sales, product knowledge, communication, and teamwork.”

Next, visualize the skills clusters beneath these main categories as the secondary skills in the hierarchy. Beneath “sales,” for example, you would include “lead generation” and “customer service,” as well as soft skills like “communication.” 

Depending on how granular you’d like to get, you could break the skills within each cluster down further. For instance, “lead generation” and “customer service” are both still relatively broad categories that could include even more specific skills, such as “research” and “communications” for lead generation and “conflict resolution” and “patience” for customer service.

By following this methodology for each role in your organization, you can create skills taxonomies for your entire workforce. Taking this initiative can also help you create career paths for employees who are looking to grow their careers and learn new skills at your company — all of which can help with retention.

How do I build a skills taxonomy for a particular role?

Start by identifying the skills most in-demand for that particular role. LinkedIn recently released a list of the most in-demand skills per role based on LinkedIn skills data. These skills can provide a good starting point for each role in question:  

How do you implement a skills taxonomy in a way that’s meaningful to employees?

According to the 2023 Workplace Learning Report, employees across the globe said the following would most motivate them to spend more time learning:

1. If it helped them progress toward career goals
2. If it helped them stay up-to-date in their fields
3. If they had more time for it
4. If it was personalized learning for their interests and career goals

Each of these motivations represents an opportunity to engage employees in ongoing workplace learning — and they’re opportunities many organizations are missing out on right now:

• Only 15% of employees say their organization encouraged them to move to a new role 
• Only 26% say their organization challenge them to learn a new skill or take a skills-based approach to learning and development
• Only 14% say their organization encouraged them to build a new career development plan

Building a skills taxonomy can help your organization capitalize on each of these opportunities simultaneously:

• Employees can compare their current role’s skills taxonomy to the skills taxonomy required for a more senior position they may be interested in, giving them an opportunity to recognize the skills they need to learn or develop for a promotion
• Employees and their managers can work together to understand the skills within their current taxonomies that they need to develop to succeed at their job
• By identifying key skills within taxonomies that employees still need to develop, employees, their managers, and L&D professionals can work together to create a personalized, skills-based approach to career development 

The most valuable aspect of skills taxonomies is the unifying methodology they provide to both L&D professionals and the employees they’re training. When everyone clearly understands the skills and competencies required for every role in their organization, they know exactly which skills they need to develop to advance to the next stage of their careers.