What's a Skills Taxonomy (vs. Ontology)? And Why Having One Makes HR Easier

Organizations that haven't adopted a skills taxonomy or ontology often struggle to assess the skills and capabilities of their workforce.

Today, talent development teams are under pressure to fill vacancies within their organizations to remain competitive and innovative. However, without a taxonomy, it's tough to plan for the future, properly resource initiatives, and close skill gaps.

A skills taxonomy helps standardize what skills are, their hierarchy and importance within the organization, and much more. This mechanism to organize skills helps bring the clarity that talent development teams need to support broader workforce transformation initiatives, especially as many transition from a role-based organization to a skills-based organization.

Here's how they're commonly used at work:

• Recruitment: Create precise job descriptions and identify candidates with the specified skill sets.
   
• Training and Development: Develop targeted training programs based on the skills identified in the taxonomy. Tailor learning paths to employees' needs and career aspirations.
   
• Performance Management: Assess employees' performance against the defined skill levels. Use this assessment to provide constructive feedback and plan their development.
   
• Succession Planning: Identify high-potential employees and prepare them for future leadership roles by mapping their skills to the required competencies.

In many ways, a taxonomy provides the foundation for talent management operations. But given all the benefits of having a taxonomy, why are organizations still struggling to adopt it?

The short answer is that it can be an arduous process, or the solutions available on the market are too simple, complex, or expensive.

In this blog, we'll explain the ins and outs of skill taxonomies, why they're helpful, and some challenges with using them.

Today, many businesses face challenges in identifying and categorizing employees' skills, aligning skill sets with organizational needs, and managing workforce development. None of these are small issues, but solving these challenges can tremendously impact an organization's ability to attract and retain talent and stay competitive in the market. A skills taxonomy is a part of that solution.

Going without one, however, presents some challenges. Here are three that HR and talent development teams face when they don't use a taxonomy:

1. Undefined Skill Requirements: Many HR professionals and talent development leaders struggle to clearly define the skills required for various roles within their organizations. This lack of clarity leads to inefficiencies in hiring, training, and development processes.
    
2. Fragmented Learning Paths: Without a structured approach, learning and development initiatives can become fragmented and inconsistent, leading to suboptimal results and wasted resources. This can also make it harder to get buy-in for future programs.
    
3. Difficulty Measuring Proficiency: Without a standardized framework, assessing employees' skill levels and tracking their progress over time can be challenging.

A skills taxonomy is a hierarchical framework that categorizes and organizes skills into groups and subgroups based on their relationships and similarities. It provides a structured way to identify, define, and measure skills within an organization. Unlike a skills ontology, which focuses on the connections between different skills, a skills taxonomy emphasizes the classification and hierarchy of skills.

What are the benefits of a skills taxonomy?

Clarity in Skill Requirements

A skill taxonomy provides a clear and standardized definition of skills required for different roles. This clarity helps HR professionals as they recruit prospective job candidates, assess current employees for promotions and more. 

Streamlined Learning Paths

Since skills are categorized neatly, it makes creating learning paths easier for learning and development professionals. Having insight into skills and the levels of proficiency, L&D professionals can more easily curate training, group resources, and deliver them to employees. 

Effective Skill Assessment

A well-defined skills taxonomy allows talent development teams to assess employees' proficiency levels consistently and accurately. This assessment also helps identify skill gaps and tailor development programs to address those gaps effectively.

Enhanced Talent Management

By clearly understanding skill requirements and employee proficiency, talent development teams can make more informed decisions about promotions, role changes, succession planning, and more.

Talent development teams can create a skills taxonomy by identifying and categorizing the essential skills needed across various roles. They would then use this taxonomy to assess the workforce, identify gaps, and tailor training programs to address those needs.

Briefly, here's what it takes to develop a skills taxonomy:

1. Identify Key Skills: Identify the essential skills required for various roles within your organization. To gather insights, engage with stakeholders, including department heads, team leaders, and employees.
    
2. Categorize Skills: Group similar skills into categories and subcategories. For example, "technical skills" could include subcategories like "software development," "data analysis," and "network management."
    
3. Define Skill Levels: Establish proficiency levels for each skill, ranging from beginner to expert. Define and distinguish each level.
    
4. Map Skills to Roles: By mapping skills to roles, it helps create job descriptions, identify training needs, and plan career development paths. For example, Skillsoft’s Role Advisor helps with this by prompting employees to select their role, which then populates the associated skills. Then, the Role Advisor suggests training to continually progress their careers. Skills are mapped to roles using an AI algorithm. 
    
5. Implement and Integrate: Implement the skills taxonomy within your organization's learning management system (LMS) and other relevant platforms. Ensure that it is integrated with your talent management processes.

This simplified version of the process leaves out many of the nuances involved in developing a taxonomy or ontology. It can get complicated. Just getting a meeting on every stakeholder's calendar to discuss this idea sounds impossible.

Nowadays, it's less common for organizations to build a skills taxonomy in-house. Talent development teams more often work with an outside consultant to help with some portion of the work or lean into the solutions provided by existing partners.

Many companies offer services or software solutions, either independently or as part of an ecosystem, to define and classify skills, gather and organize data, and then use this information to guide decision-making for professional development, career progression, and more. This includes Skillsoft, including our aforementioned Role Advisor feature in Percipio, which draws from an AI-generated taxonomy.

Skillsoft also integrates with many learning management systems, human capital management platforms, and similar vendors to tie skill taxonomies to training. One example is our integration with Workday, which offers its customers a skills ontology called the Skills Cloud. It uses machine learning to discover skills and capabilities, and then connect the people with said skills to training and jobs. Our integration makes Skillsoft training available in Workday, among other functions.

Several companies overlap in this area, with some more specialized than others, taking in data from various sources — social media, resumes, project management tools, and so on — to paint a detailed picture of what an individual employee is capable of. At a macro level, platform administrators can see the composition of their organization and understand how skills flow in and out of the business. This helps inform their next move, whether that's training or hiring or a combination of the two.

Some may encounter potential challenges whether pursuing this in-house or going with outside help. That's next.

Potential Hurdles in Developing and Implementing a Skills Taxonomy

Developing and implementing a skills taxonomy can present certain challenges despite the benefits.

For starters, creating a comprehensive skills taxonomy requires significant time and effort. It involves gathering input from various stakeholders and ensuring that the taxonomy accurately reflects the organization's needs. For this reason alone, many talent development teams opt to work with consultants or companies that provide a satisfactory taxonomy or ontology that they can use internally.

Whether developed in-house or outsourced, when a skills taxonomy is settled on, its value must be communicated to the workforce. In this case, change can be hard for some. Establishing new standards or processes in talent management will require communication and transparency, which will go a long way toward settling fears of skill obsolescence or devaluation.

Then, the team must update it over time. "As the company changes, as the marketplace changes, as the technology changes, as the products you offer change, we have to reskill people on a regular basis," said Josh Bersin, HR research analyst, in this podcast. "We're all in a world of continuous reskilling or upskilling, and sometimes we need a lot of new skills because the job we're in is going away... so what a skills ontology is intended to do is organize these skills into a hierarchy."

Ongoing evaluation and maintenance of your skills taxonomy keep it relevant, providing several benefits, like staying current on skill gaps, future business needs, and more.

A skills taxonomy provides a structured approach to managing skills, ensuring clarity, consistency, and efficiency in talent management processes. They also help organizations stay competitive and achieve their strategic goals by addressing skill gaps, streamlining learning paths, and enhancing talent management.

As we face the next era of technological change, continuous learning and development will be key to remaining adaptable. Leveraging a skills taxonomy can help organizations embrace this change, drive growth, and unlock human potential.

As your team strives to support its workforce through learning and development, see how Skillsoft can help.

Our Platform Uses an AI-generated Taxonomy to Help Personalize Learning

Skillsoft Percipio uses an AI-generated skills taxonomy to create targeted learning paths. Percipio relies on AI/ML to map training to skills, and in doing so, learners get a personalized experience and find content that’s suited to their career aspirations. By using AI to complement ongoing assessments and activity in the platform, learners get clear direction on which training is best for them.

As learners onboard for the first time, they interact with our Role Advisor — a way to fully customize the platform to each individual’s preferences and interests. It also serves career-relevant training from the very start. 

Naturally, this helps LMS admins who want to speed up content delivery and encourage learners to invest in themselves.

See how the platform personalizes learning by requesting a demo.