Episode 73: What are the Benefits of Measuring Employee Skills Data? (Interview with Rick van Echtelt)
By 2025, 50% of all employees will need to be re-skilled, according to the World Economic Forum's future of jobs 2020 research. The same study predicts 97 million new jobs will emerge and 85 million will be displaced by a shift in labour between humans and machines. Most commentators believe that the pandemic has only accelerated this progress. It is not surprising, therefore, that skill availability is high on the CEO’s agenda. Recent research by McKinsey highlights that 79% of CEOs are concerned about skill availability impacting, innovation, cost, quality and growth.
My guest on this week's podcast is Rick Van Echtelt, The Founder and CEO at AG5. Through their software AG5’s mission is simple, to visualise and close skills gaps. Rick and his team do this by essentially providing an accounting system for skills, which aggregates data from multiple systems, maps current skills, tracks progress towards learning new skills and identifies some missing skills needed to future-proof the organisation.
You can listen to this week’s episode below, or by using your podcast app of choice, just click the corresponding image to get access via the podcast website here.
In our conversation, Rick and I discuss:
The challenges involved in getting a handle on skills data
The value of measuring skills data and how companies should approach it
How having a skills based view provides multiple benefits
How AG5 helps clients visualise and close skills gaps
This episode is a must listen for anyone interested or involved in creating a workforce planning, learning and recruiting tool. So that is CHROs and anyone in a people analytics, learning, workforce planning, talent acquisition or HR business partner role.
Support for this podcast is brought to you by AG5. To learn more, visit www.ag5.com.
Interview Transcript
David Green: Today I am delighted to welcome Rick Van Echtelt, Founder and CEO of AG5, to The Digital HR Leaders Podcast. Welcome to the show Rick, it is great to have you on. Can you provide listeners with a brief introduction to you and AG5?
Rick van Echtelt: Yes, of course. My name is Rick Van Echtelt. I live in a little village near Amsterdam. I am a father of two children and I am the CEO and Co-Founder of AG5. With AG5, we build and sell skills intelligence software. A few years ago, we did this especially for the SNB market for small to midsize markets, but the last few years, our software is more and more used on a global scale with global enterprises.
We have two offices, one in Amsterdam, one in Berlin and we are around 25 people.
David Green: Great, and I think you gave a hint on the answer to my next question, during your introduction there. What challenges are you trying to solve for customers at AG5?
Rick van Echtelt: I always say to our employees, our mission is very simple, it is visualising skills gaps and showing them the actions to close. This sounds simple, but the challenge is that skills data is, most of the time, in different systems. It is not only in Excel, but also in some parts of the HR system or e-learning system and the other challenging thing is that the requirements, that people have, are getting more and more complicated with regards to requirements on skills. In order to make a match between requirements and different skills and visualise that gap, because you need a gap to really visualise that. And to show the team leaders 100% accurate data, so that they really trust the data that they see, that is our challenge.
David Green: And I guess at the moment, skills seems to be not just for those of us that work in HR, actually for the CEO it is one of the top three challenges. Even before the pandemic, arguably it is even more of an issue now. The pace of change, the World Economic Forum called it the fourth industrial revolution, I can't remember the exact stats but they have said by 2025, there will be over 90 million new jobs created and 80 million or so will disappear, due to automation. It is huge at the moment, isn’t it. I think it is particularly interesting in the primary industry that you serve with AG5, the manufacturing industry, it would be great to understand a little bit about that unique setting for manufacturing companies and the research that you have done to help understand their challenges and solve some of the problems that you have already highlighted so far?
Rick van Echtelt: When we started, let's say 10 years ago, we started first with the firefighters and we wanted to move ahead to the manufacturers. At first, we had a nice L&D system but talking to manufacturers, we found out that it wasn't a very good match. They asked us “Hey, can you help us with a skills matrix?” And we were thinking, okay, yeah, it is not that difficult, that's 2 X’s and implore a gap. We started asking them “Okay, send us your Excel and we will have a look at it” Then the first factory that came in was like 300 people but they had, in this Excel, around ten thousand skills results. So that is more than 30-40 skills per person. And we think, oh my God, this is a lot. We went further and did some more research and we asked more manufacturers “Hey, what are you doing with these skills matrices and why are you doing them in Excel?” and “Why is there so much data?”. I think we got around 10-15 different Excels from different companies and what we found out, they were all really different, really complicated, a lot of data in it, like maybe people were really programming it. We were thinking, this is really interesting because why are they doing this? They have an LMS system, they have SAP SuccessFactors, they have e-learning systems, they have all the systems in place and still they are doing this in Excel. We found out that in all those systems, the e-learning system and the LMS's, for example, if you are an operator, you can say in that system and operator needs these skills to do the job. But now this operator walks into the factory and when he works on line number one, he needs to have different skills than on line number 10. So the environment where he works, decides what skills he needs. This can be very complicated or sophisticated because for example, if you are an operator on line one, section two, you need these skills from this system, these job skills and those e-learnings. And this is what they did, it was in Excel where they put in all these requirements and skills and then started using it. I asked where do you use this? In my opinion, I thought they used it for L&D, that was one part, but they also used it very much for auditors. There are many times manufacturers are audited and they have to show the auditors how well the staff are trained. Also, they used it for planning, if someone is sick in the team, who can work on line one and has the right skills? It was also using it for development and the strange thing was, most of the time, it was just one guy who was responsible for this Excel and no one could touch it because he put in the formulas. It then became bigger and bigger and then if the management needs reports, they went to this guy. This was the start, we had to solve this problem and start from scratch. Start making a system where you can produce skills matrices at scale, but also put all those requirements in and make sure that you can visualise this data. So that is how we came in.
David Green: It is kind of, a high risk strategy having one person in the operation that actually understands the Excel spreadsheet that they have created.
Rick van Echtelt: Yeah. And they always love it in the beginning but, after a while, it is getting more and more complicated and they start to hate their own Excel because they are responsible for it and management is still asking for various reports. So in the beginning they like it, but they are very happy if they see us because then they know they can get rid of their Excel and their spreadsheets.
David Green: I think from what you said there, Rick, I think you have really honed in on why skills is such a complex topic. You are not just using that data for learning and development, you are not just using that data to support workforce planning or in the example you gave there, you are not just using that data just to provide information to auditors. This leads us on to the next question, I think. You have been working in this area for 10 years and arguably skills has become even more of a hot topic. Why do you think skills are such a hot topic today?
Rick van Echtelt: If you look at it globally, every industry is impacted by technology. People are really thinking about the current job that they have right now, is this still the same job that it will be in 10 years or even does it still exist and what skills do I need? So on the one hand, you see a lot of new jobs come on to the market with new skills and then the other hand, we see a lot of old jobs are disappearing in the next five/six years. So if you look at this mismatch between the markets, then people have to do something. I think it is already going on just day-to-day with recruiters, or even if I look at my own company, we had to find a new customer success manager and we had around 200 applicants coming in. How do you shift? And the first thing that we did was on skills, so let's see, how many languages do they speak? That was the first shift. The second shift, what kind of technologies do they use? We want to have someone who is expert on Excel. And then we found someone and she came from a totally different industry, she came from the traveling industry and she was working at a traveling shop and that industry was being disrupted. Was I searching for someone who has a job as travel agent? No. Was I searching for someone who speaks a lot of languages and understands some technology and can deal with customers? Yes, I was. So I think it is already starting, that all the resumes are changing already, it will even go faster. So yeah, I understand why it is such a hot topic right now.
David Green: Yeah, we talked about the World Economic Forum data earlier, it is just a huge, huge change and there are these new technologies, but that is allowing new entrants to come into markets and challenge the existing companies that are there. And suddenly if you are looking for digital skills, you are not just competing with your traditional competitors, you are competing with other people that want those digital skills as well. So it is a very complex topic. The next question is who, in your view, own skills in the organisation?
Rick van Echtelt: First of all I think you, as a person, as an employee, of course own your own skills. You are responsible for your own career. But in an organisation, the organisation needs to support the employees with knowing what skills they have right now and where they can grow to. Many companies still cannot offer that just to the employees, what skills do we have, because it is in so many different systems. L&D is, I would say, responsible for getting data together and showing employees what data they have and also which data is valid, which can be complicated. What we see is that it is not only L&D who can provide the skills, but also the business they have to say what it is they need? L&D needs to know what kind of skills are necessary for the company. For example, it is not only manufacturing but also we have customers like IT companies, the L&D people say “okay, we need programmers” But the business says, let's say we have a customer who is selling Hewlett- Packard or Dell, they need to have a status, for example a global gold status, because otherwise they cannot do tenures. The requirements of a global gold status means that you need 20 people on this skill, 30 people on that skill, 40 people on that skill. So what you see is that L&D needs to know what are the requirements from the business, or what are the goals from the business, where do we want to go? Because it really impacts the business, if you don't have that correct. Based on that, they can set a program, planning for the employee and the employee can see that for me, it is better if I would go in that direction, because that is where the company needs me instead of in that direction.
So, who is owning it? I think, of course, the employee. L&D is very important, but they need to get input from the business and it is nice for L&D because they are at the table with the management. I think this becomes a really important topic, what is the skills gap and where is it going.
David Green: As you said, that ability to help employees understand how their skills fit in with the organisation. What additional skills, that if they acquire, can really help develop their career and maybe earn more money, frankly, within an organisation. And then as you said, aligning that to what the business needs are, so continuing to understand if I have got six key skills, but if I really want to grow my career in a company it is these 7, 8, 9 skills that I need to get. Actually visualising that for the employee, but also for the organisation as well, which I guess is what you do. You provide the glue that kind of sticks all those elements together.
That then leads on to an interesting conversation for us about skills-based workforce planning, which is certainly something in the research we have done at Insight222, that we see more and more organisations want to do. There are more organisations that want to do it, than are actually doing it at the moment, which is quite interesting. And having that skill-based view of the workforce, we hear a lot about talent marketplaces and how skills can effectively be the data that helps support that. We hear a lot about internal mobility. I don't think it is just something that is from the pandemic, I think a lot of organisations now are wanting to develop their own talent, not just to retain it but also to develop it and keep some of those key skills that they need, within the organisation as well.
We spoke recently on the podcast with Unilever and the work they have done in this space, for example. But here we are faced with different and potentially more critical reason for a skill-based view, compliance and business continuity. What are your thoughts on skills-based talent management for compliance versus talent marketplace and internal mobility? And what can other companies learn from organisations that have to take this view for compliance reasons?
Rick van Echtelt: I think a very good trend that we see, is the talent marketplaces. If you look at big companies, especially if you look at people who work in the offices, there are big projects going on. They are working globally and there is a new project that they can post on these talent marketplaces and people can react to that. You get some really great matches between supply and demand, I think that is really great what is happening. On the other hand, because this is more the project is coming and you need people, I think what the next step will be is that skills will be aligned more with impacts. What I mean with that is for example, some skills can impact turnover, some skills can impact on reduce costs or risks and some skills will impact on safety. Let me give you an example, let's say you work at an international company and they do a marketing campaign. The woman who would produce the campaign on the website, she makes a mistake because she was not that good in WordPress. The manager sees it, okay, she made that mistake, it was not that good. Did it impact the business? Probably not. And so she is not that good at her skill but it did not impact the turnover, so it was low risk on that side. But, for example in that same company, they also do some production. There was someone who they produced an ice cream and he was not that experienced, he is the youngest in the team and he has to mix some cacao. He did not mix five kilo, but he mixed six kilos. Now look at the impact of that skill at turnover. Oh my God, this production line was running, maybe it was already sent out so then you have to do a callback, there is some money involved. What I see a lot of times if there are mistakes, you have to stop the production, get everything off, clean everything, so the production is closed for one/ two hours. There is a lot of costs and risks involved there. Or maybe he put something wrong in it, so then it is safety.
What I think you will see is, yes, the marketplaces will be very good for projects and skills matching, but I think there are still a lot of skills that are treated equally and I think we will see that more and more, we will go to reports on how important are the different skills, what is the relevance and how does it impact certain skills, our business and the continuity.
So I think that will be the next steps that we will see.
David Green: That is a really interesting idea and an interesting evolution of it as well. We always talk with the clients we work with, around people analytics, is all about tying the work to the impact on the business. So this is a perfect example of that, maybe focusing more on the skills that matter and that actually have an impact on business continuity and everything else. Very, very interesting.
So I think we have got an idea about some of the answers you will give to the next question, it is very complex, obviously you at AG5 are hoping to solve a complex challenge for your clients. Why do you think organisations are struggling to get a handle on skills data?
Rick van Echtelt: Like I previously said, it is in different systems, so it is difficult to get it up. What you see is a lot of companies that talk about skills currency, they say this is the new currency. But the problem with this currency is you can’t grab it from one system, it is in different places. Then my question is, if I hear currency then you need a kind of accounting system, to make sure that everything goes well. If you have a company with turnover, but no accounting system, that doesn't go right. So what you see is that you have these different systems where the skills are in there as this currency on the one hand, on the other hand, you have the demand from the business, the requirements. So you need a skills accounting system, where you can really see what is the gap. Let's say the losses is the gap, is it growing or is it going down? If it is growing, your losses are growing, if it is increasing then your turn over is getting better. But also what is the stock, so how much do we have, of this currency, in this place? So you need to really get grip on it so that you can make forecasts and if you can forecast then you can see every day where you are standing, then you can make the next step. But it is difficult for companies to know where to start with this. The currency that you get with that is that fallet? So what currency do we take and what don't we don't take. You have to take some steps to do this, so that is why I think companies are struggling with it because it is something that you can do tomorrow.
David Green: It is a long-term investment, isn’t it? Obviously you have been working with companies for 10 years, what are some of the business outcomes that you can get, if you do get a handle on a skills-based view of the workforce?
Rick van Echtelt: Let me give an example. We started four years ago with an airplane company. On one hand, they have passengers and on the other hand, they have cargo. Cargo was not that important for them, they have around 3-4,000 people working there. But when we came there, there were like 12-14 people who were daily, working on the skills. I thought why is that? It is difficult because if you have, for example an airplane, you put in live horses or live animals and that is different than dangerous goods. So they had a lot of different requirements on the different workplaces and the skills were on a lot of different systems. So what we started doing, we had this discussion, let's make it intelligent skills and what does that mean? And what is your vision? We asked them step by step. The first step was, let's take all your employee data from your HR that was soft. We took all the data in the system and we put in all the requirements per workplace. So now we have the requirements, let's see where that skills data comes from. Then we started with Moodle, this is a free open source, and they did some safety training on that. We connected Moodle to our system. Second was let's take the safety training, they are in Cornerstone. We take all the Cornerstone, the safety training. That went further, they had a system called Drillster, that is a system micro learning. Then the next step was iAuditor, there was a system on the work. So we had four or five of these systems getting the data in and then it started working for them because the data became accurate. There were many dashboards created, I think 200 dashboards all around the globe, with all the requirements from the globe.
What they found out was that it saved them hundreds of hours per month, there was less mistakes in it. Their approach was step-by-step, but they got into control. Then I would call it an accounting system, they could really see what is the moment right now? Where do we go to? What is the next step?
They could really put it in the organisation.
David Green: Airlines of course, operate on pretty fine margins ,so those sort of efficiencies are really important to the health of the business at the end of the day.
Rick van Echtelt: And what was nice of course with COVID, they had a lot of people who work with passengers.
They said, they are on the payroll and we have a lot of temporary people with cargo, so let's do some re-skilling and put people from passengers to cargo and everything was automated. So they were so happy that they could do it on a large scale, through this whole open re-skilling and that the data was still accurate because there is a lot of compliance involved and they needed to be sure that this was done correctly.
David Green: A good story there of using that skills data, to re-deploy people which okay, the crisis was the crisis, but that could happen in everyday life as well depending on demand from the business and different industries. The ability to re-deploy people by using skills data and supplement that with any additional learning that you might want to do as well.
Rick, we are coming to the end of our conversation, but this is a question that we are asking everyone on this series. You have covered quite a lot of this already in our conversation, so this could be an opportunity to provide some concluding thoughts or key advice, key takeaways for listeners. What is the value of measuring skills data and how should companies approach it?
Rick van Echtelt: The approach is always, like many software projects, start small. Start where the pain is, where people really feel the pain, because then you get fast results. So where is the pain, start small, get results and then spread it out around the company. If you do that and you get these results, the feeling that our customers have is that they are finally getting control of the data. So put the manual work out, get the guys who run this now it is only 2, 3, 4 people at different locations who are responsible. If you take these steps, you will see it is not the responsibility anymore for one or two people, but you can really get your data to the team leaders and people really feel that they become responsible for the skills for the team and employees. They are so happy when they first see this app, they have worked already 20 years at this company and this is the first time that they see their skills data and they see some certificates. Sometimes even L&D managers are a little bit afraid of this rollout because how will people react? Is it like monitoring? No, people are really happy, even if they worked 25 years, that they can really see what skills they have achieved in the last 10/15 years at this company. So, it is really like a recognition of this engineer, or this idea, or someone who works there. I would say start small, do it and you will feel very quickly the time that it saves you, but also the great benefits of reporting and getting everyone involved.
David Green: And also it is about getting that data out to managers, to team leaders, in a visual way, in a usable way, so they can actually do something with it. I guess that is the difference between getting that skills data out there versus having it hidden away in an Excel spreadsheet.
Rick, it has been wonderful to talk to you and learnt more about the work you are doing at AG5. Thanks for being a guest on The Digital HR Leaders Podcast. Can you let listeners know how they can stay in touch with you, follow you on social media and also find out more about the work you do at AG5?
Rick van Echtelt: Of course. I am on LinkedIn, so people can find me there and can reach out to me. Also, go to our websites and you can find all the information about skills intelligence software, www.ag5.com
David Green: Brilliant. Well, Rick, it has been great to have you on the show, thank you very much for joining us.
Rick van Echtelt: Okay. Thank you, David.