How to Set Skill Taxonomies Without Expensive Software
Bradford R. GlaserYou've been researching skill taxonomies, and the pricing is quite brutal. Big company systems run tens of thousands of dollars every year, and your organization definitely needs to map competencies for talent planning or maybe compliance requirements. But there's just no way the budget will stretch to cover the cost of those tools. Without dedicated software, you're stuck.
Most businesses that have between 50 to 10,000 employees are already tracking their skill taxonomies, and the tools they're working with are actually pretty simple. The public frameworks that are out there for free are actually quite complete once you look into them.
ONET lists 1,016 occupation titles along with nearly 277 descriptors, and organizations use these for their own needs all the time. The UK Skills Taxonomy takes a different strategy, with 10,500 skills that are organized into 143 groups, and ESCO covers 13,939 skills across 3,039 occupations. These resources were built from the ground up specifically for organizations to use without any licensing fees attached.
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Table of Contents
How to Structure Your Skill Taxonomy
A skill taxonomy is a map of all the abilities and competencies your organization needs to track and manage. The structure looks like a family tree for professional skills, with the main domains at the top level and increasingly specific competencies branching out underneath them in a logical hierarchy. You begin with "Technical Skills" as one of your main domains, and from there you'd divide it into more focused categories like "Data Analysis" and "Software Development." Each category then holds all the exact skills that your employees actually have and use in their roles.
The biggest mistake I see organizations make is that they overcomplicate their taxonomy right from day one. They attempt to capture every possible skill variation and nuance and end up with an unwieldy mess that nobody in the company actually wants to use or update. Most organizations only need somewhere between 200 and 500 separate skills in their taxonomy to adequately cover all their bases. Once you pass that threshold, you're probably just splitting hairs between skills that don't need to be tracked as separate entities in your system.
Without proper organization and governance, some pretty frustrating issues will inevitably happen across your company. The same basic skill will get listed under 3 or 4 different names across different departments because nobody's coordinating the words they use. Marketing might call it "content creation," as HR has it listed as "writing skills," and at the same time, the communications team has entered it into the system as "copywriting." What you have now is three separate versions of the same skill that are cluttering up your entire system, and accurate reporting becomes nearly impossible.
The best taxonomy lives somewhere in that middle ground between being too vague to be of any help and being so specific that it gets unmanageable. You need enough detail and granularity to make the system actually useful for workforce planning. But you don't want so much detail that employees need a training manual just to understand your taxonomy structure.
When every manager who uses the system needs an explanation of the exact difference between "intermediate Excel" and "advanced spreadsheet analysis," then you've obviously gone too granular with your skill definitions. You want to make it simple enough that employees can quickly find and choose their skills at a glance and still keep enough detail to capture the real differences in employee capabilities that actually matter for your business.
Start with What Others Have Already Built
A skill taxonomy might sound like a big project, and it can be. The great news, though, is that you don't have to build one yourself from the ground up. Multiple free resources are already out there with all the hard work done for you, and these frameworks are out there, ready for any company to grab and use. The U.S. government, by itself, has poured years of research and millions of taxpayer dollars into detailed systems that any organization can access and customize right now.
ONET is usually the database that ends up being most helpful for organizations that are just building out their skills framework. It includes over 17,000 job descriptions already mapped out with all the corresponding skills for each one, and it covers the roles you'd find in a typical workplace. LinkedIn has also opened up parts of its Skills Graph to everyone and gives you a window into the language that employees use to describe what they can do. For technical roles, IEEE has these detailed frameworks that go into the engineering and technology competencies in detail. None of these is going to fit your organization perfectly straight away. But they do give you a strong starting point that you can adapt and expand as needed.
These resources have some benefits that actually make them worth the effort. Organizations in all kinds of industries have been working with and refining these frameworks for years. The language is solid – professional enough to sound credible but accessible enough that you won't need a dictionary to get through it. And since the government created these resources, they're completely free to use in any way you want – no lawyers or licensing involved.
The smartest move is to treat these frameworks as raw material that you can adapt and customize – not as some finished product that you just plug in and use. Start by identifying which sections actually match up with the roles at your company. Pull out the skills and competencies that make sense for your workforce and then take an important step – translate them into the language your company already uses every day. If ONET calls something "interpersonal communication" but everyone at your company says "client relationships," then client relationships is what should go in your taxonomy.
It takes away that terrible feeling of opening up a blank spreadsheet and having no idea what to write. You won't have to waste time trying to brainstorm every possible skill your employees could need because you'll already have the proven templates to work from. Your energy can go toward what actually makes your organization different instead of writing out the same basic competencies that every other company in your industry already uses.
Build Your Taxonomy with Spreadsheet Tools
Once you've chosen a framework that works for your organization, the next step is putting it somewhere where employees will actually use it. The great news is that most businesses already have just what they need installed on every computer in the office. Excel and Google Sheets might not seem glamorous. But they can do everything that those expensive, specialized software tools promise.
The best way to set this up is with three separate tabs in your spreadsheet. Your first tab is where all the skills live – every single competency your organization cares about, together in one spot. The second tab is where you map these skills to the different roles across your company, and it helps everyone see what's expected for each position. The third tab is arguably the most important because it defines what each proficiency level means. Without these definitions, one employee's "intermediate" is another employee's "advanced," and suddenly your whole system falls apart.
Data validation makes everyone pick "Expert" from a dropdown menu instead of letting them type in whatever version pops into their head – "expert," "Expert Level," "Very Advanced," and all the other creative variations. A single dropdown menu saves you from hours of mind-numbing data cleanup. When tracking down which roles at your company need Python programming skills, VLOOKUP can grab that information from the different tabs and have your answer ready in about 2 seconds flat. Conditional formatting works very well for skill tracking projects. Set up some automatic settings, and your cells will change color based on proficiency – green for advanced skills, yellow for intermediate and red for areas that need work. Since our brains process colors faster than text, you'll see patterns and gaps in seconds instead of minutes of scanning through hundreds of cells.
These spreadsheet-based systems work for most businesses, and they'll serve you well right up until you hit a few specific limits. Files start to get sluggish and annoying once you have more than 1,000 different skills in there, or when you have more than 50 users all trying to access them. Load times become a pain. But most teams won't ever need to track that many skills or users anyway, so it almost never turns into a problem.
Version control can get messy pretty fast when you have a few team members who all need to edit the same file at once. Google Sheets works great here since it tracks everything automatically – every edit, the employee who made it and the timestamp for each change. Excel can do this, too. But you'll need to set up an audit trail manually and stay on top of it. They both support pivot tables, though, which work when you need to find skill gaps by department or track how competencies evolve across your organization.
Launch Your Skill Taxonomy in Phases
A pilot group makes plenty of sense if you want to see how your skill taxonomy actually performs in practice. The best strategy is to find a team that already cares about skill development or one that desperately needs more of a look into what they can and can't do. Either approach will work well, and either way, you'll get the feedback you need without the difficulty and problems that might come up if you roll this out company-wide from day 1.
Around day 60, the best move is to pull in a second group and see what they have to say about everything you've documented so far. This phase tends to reveal some interesting disconnects because two different teams will usually describe the exact same skill in completely different terms. Engineers and product managers might each have "agile methodology" on their profiles. But each group is actually talking about something else completely. These mismatched definitions are a real problem, and you need to get everyone in a room together to hash them out. Let them fester, and they'll undermine the whole taxonomy project down the line.
After 90 days, it makes sense to expand the rollout to more teams. At this point, the taxonomy may have already helped you staff a big project with the right team members, or it could have revealed a skill gap that made it easy to justify spending money on training. These wins in your back pocket help maintain momentum, and they come in useful when skeptics start questioning if the whole project was worth the effort.
Adoption metrics can be pretty basic and still tell you what you need to know. Profile completion rates alone will show you if employees are actually engaging with the system or just ignoring it. Search data is another simple one – it shows if managers are actively hunting for expertise through the taxonomy when they need help with something.
How to Keep Your Taxonomy Up to Date
Quarterly review cycles are a simple way to stay on top of changes. Every 3 months or so, you want to bring your team together and review which skills need to be added to your system and which ones have become obsolete. AI and automation skills are perfect examples of why this matters. Two years ago, most organizations didn't even have these categories in their taxonomies at all. But now they're essential capabilities for nearly every department in the organization. Your taxonomy has to evolve at the same pace that your industry does, or otherwise it becomes useless pretty fast.
Ownership does make all the difference if you want to get everything aligned across the board. The best strategy is to assign skill owners who can take charge of big domains like technical skills or leadership competencies.
These owners become the experts everyone turns to when questions pop up about where a new skill belongs or if an old one even matters anymore. Monthly or quarterly meetings with these stakeholders give you a chance to review proposed changes together and make decisions as a group. It just gets everyone on the same page.
The bigger your taxonomy gets, the harder it gets to maintain consistency across departments. One department might call something "data analysis" while another department uses "data analytics" for the exact same skill set. Version numbers and change logs are the best defense against this confusion. A basic spreadsheet that tracks every modification tells you what changed, when the change happened, and why you made that particular choice. Document your reasoning for each big choice while it's still fresh in your mind. Six months from now, when somebody inevitably asks why you combined two skills or split another one apart, you'll have the answer documented and ready to share.
Outside forces will always push you to update your taxonomy way faster than what feels comfortable. Industry certifications seem to appear out of nowhere lately. Regulatory laws change, and nobody gives you any heads up about it. One day, your biggest client calls and they need proof of competencies that literally nobody was even talking about 3 months ago. The smartest move is to build some flexibility into your review process from day one because then you'll be able to roll with these curveballs without completely blowing up your system every time the situation changes.
Build Your Foundation With Simple Steps
HR teams who were drowning in skills management work have actually managed to become the strategic advisors their organizations needed, and the only factor that changed was their willingness to build a basic system instead of holding out for some perfect tool that might never come. The momentum picks up fast after you get even a basic framework going. Online communities and professional forums have tons of practitioners who share their templates and what worked for them and what didn't. And as you start adding your own experiences to these discussions, you become part of this collaborative network where everybody learns from each other and continues to get better.
A strong foundation sets you up for building a skills taxonomy that actually works for your organization. Assessment tools give you the data you need right from the start – a picture of what your workforce can do today – not what you assume they can do. HRDQ has assessments designed specifically for this, and they're excellent at uncovering the capability patterns across your teams. The whole taxonomy creation process gets easier if you have employee data to guide your decisions. You can create categories and proficiency levels that match what's actually happening in your organization – not some generic template from an industry handbook.
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