Improving Employee Development: How to Create and Manage a Skills Inventory at Your Company

Promotion and advancement are top-of-mind issues for today’s employees, so learning how to create and manage a skills inventory at your company may help you respond more effectively.

In our research, Indeed found that over a third of respondents in Canada (39%) have been overlooked for a promotion or pay rise—a number that rose to 42% for women and 46% for workers aged 65+.

Only half (51%) of respondents were satisfied with the pace of advancement in their organization. Stats like these inevitably drive turnover, higher recruitment costs and loss of valuable skills. In this article, we look at how a skills inventory can help create a more data-driven approach to advancement that simplifies workforce planning while improving employee retention and wellbeing.

What is a skills inventory?

A skills inventory is an internal company resource that documents and tracks employee skills, experience, and education. Skills inventories have three main purposes:

1. Training and development. Tracking employee skills allows an employer to quickly identify opportunities for training, mentorship, career development, and growth.
2. Targeted recruitment. Skills inventories highlight larger skill gaps employers can’t easily fill through training and support a targeted recruitment process to fill them in pursuit of company goals.
3. Succession planning. A skills inventory enables the organization to proactively plan to fill vacancies internally by identifying those who are or will be ready for a promotion or have the skills for a lateral transfer.

Inventory skills benefits

Retaining and developing skilled employees is especially critical in today’s economic climate. From an employer’s perspective, a skills inventory simplifies and streamlines complex decisions surrounding training, development, advancement, and succession planning. With the skills inventory providing a line of sight into current employee competencies, employers can better predict training requirements, create more accurate educational budgets, and proactively pursue federal government funding for employee upskilling.

Companies can also more accurately determine which employees are ready for advancement while reducing the likelihood of bias influencing promotion decisions. In our recent research, Indeed found that over one-third of respondents in Canada (36%) feel employers deny them the same opportunities as their colleagues. A more data-driven approach to offering promotions can help level the playing field for all employees. It enables the organization to gain greater value from under-utilized employees whom employers might otherwise overlook for advancement, such as older employees.

From the employee’s perspective, the employer becomes more responsive and provides targeted opportunities for training, growth, and mentorship. Employees also better understand the requirements for career next steps, including the specific skills, experience, and education needed for desired roles. Such knowledge can reduce frustration with advancement decisions, draw attention to opportunities for lateral moves, and improve workplace wellbeing—all of which contribute to improved retention.

How to create and manage a skills inventory at your company

The following six steps explain how to create a skills inventory and manage it successfully: 

1. Assess company and employee needs. Using company goals and employees’ 360-degree feedback, determine your goals for creating a skills inventory. Once you know your goals, you can develop a unique approach to fit them. For example:
   1. Do you want to grow talent internally to improve retention? 
   2. Are you addressing specific employee concerns? 
   3. Do you want a more data-driven advancement and promotion process?
2. Identify the skills to track. It's not necessary to track all the employee competencies in your skills inventory. Based on your understanding of employee and employer needs, consider the most critical skills to identify and track and how you will rank each skill. A simple skills inventory might use a “Novice/Intermediate/Expert” ranking, while others may use a more granular numerical scale that you can quickly graph or display on a heat map.
3. Determine your skills tracking method. The best way to track and manage your skills inventory often depends on your business size and the number of employees you wish to track. For a smaller organization or individual department, a spreadsheet may be sufficient.
4. Test and assess employee skills. You can determine competencies in four ways: a skills audit, testing, or manager feedback. You can use one or more of these methods, depending on the role, number of employees, and type of skills you're assessing.
5. Develop an action plan. You can use your skills inventory to determine the current and anticipated skills gaps and plan your response. Managers and supervisors may have ideas on supporting their groups or individual employees, while HR may consider how company-wide patterns indicate the need for a shift in strategy.
6. Regularly review and update the inventory. A skills inventory is valuable when it remains current, so consider including inventory updates in your process. You can add new employees as they start, update skills rankings after training and development initiatives, and conduct more extensive updates annually. You can also consult your skills inventory when creating workplace training programs or during workforce planning.

A skills inventory is an effective way to identify skills gaps and development opportunities that can support employee growth while improving company retention and workplace wellbeing.Excited to see how your skills inventory boosts employee development? Don’t forget to showcase your results on your company page. Get started on Indeed’s Branding Hub.