Markets, products and services are constantly changing. As a result, skill sets of the employees also undergo frequent changes. Getting employees that have experience in a particular industry may not always be possible. Moreover, looking for specific industry experience at the time of hiring shrinks the talent pool. Organizations today, therefore, have started to look for employees with fungible skills rather than specific ones.
Fungibility refers to a measure of similarity between skills. This similarity is arrived at after taking into account all data that is available on those skills in an organization. A measure of adjacency or similarity in skills enables organizations to plan their workforce requirements in a much better way. A large number of skills may be present in an organization. Some are used fairly frequently, whereas others may be needed rarely. Grouping of skills into skill clusters by using fungibility can address the requirement of an organization in terms of appropriately skilled employees in a more accurate way. Fungibility is really like resource liquidity. Just like the liquidity of an asset is measured by how easily it can be converted into another type of asset, in the context of people it refers to the degree of availability of a person to perform a task. The important point to note is that it is not the interchange of human resource really, but the conversion of human potential to do work. Organizations can increase the number of people qualified to do a task this way, and this is what fungibility is all about.
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Agile organizations are looking to employ people with experience and skills not necessarily of their specific industry but of similar industries. They look for excellence in the skill sets possessed by the new hires, which can be remodelled to fit their industry. Cross hiring is an established practice now. Talent is acquired from different sectors and mapping and grouping of skills are done so that a greater pool of skilled employees is available to do a variety of tasks. L&T, for example, hired someone to lead the electrical and automation business. His leadership skills encompassing that of an electrical engineer with a blend of pharmaceutical background was what L&T hired him for, which are sector agnostic.
A belief in fungibility of skills and roles drives major corporates to hire short term interns that are converted into regular employees. Amazon India, for example, converts 60% of their summer interns to regular employees. These corporates look for a certain adjacent skill set in their interns at the time of hiring them, which are essentially fungible. The employees thus have the potential to do a variety of things. These employers are aware that the exact skills that they are looking for in their employees may not be available. They rely on their own re-skilling, and up-skilling programs to make their employees perform better.
We convert 60% of our summer interns into regular hires- www.livemint.com
Fungible roles and skills will be critical in future – www.peoplematters.com
Estimating fungibility between skills by combining skill similarities – www.springer.com