Introduction

In the ever-evolving landscape of talent acquisition, the traditional assumptions that have helped steer recruitment for decades are now undergoing a profound shift. One of the largest transformations in recent history is the rapid rise of skills-based hiring.

Curious about other current trends in recruitment? Check out our article on the trends that will define recruitment in 2024.

Skills-based hiring is a recruitment methodology that places a primary emphasis on the specific skills a candidate possesses rather than prioritizing qualifications like a degree, a professional certificate, or "X years of experience"..

In essence, skills-based hiring is centered around the idea that true competency lies in the tangible practical abilities demonstrated skills an individual brings to a role, rather than in their certifications, degrees, or other qualifications.

In this article, we'll break down what skills-based hiring is, why it's increasing in popularity, and how it's helping well-known companies revolutionize their current hiring practices.

A Brief Overview of Skills-Based Hiring

Skills-based hiring is a recruitment methodology that places a primary emphasis on the specific skills a candidate possesses rather than focusing on qualifications like a degree or professional certificate. It's a completely new way to tackle the skill shortage that many companies have been facing for the last few years.

This departure from the traditional focus on degrees and job titles is gaining momentum in both the private and public sector. For example, the state of Maryland announced it would no longer require a college degree for many of their currently open positions, as well as future ones.

Many other local governments are following the trend of skills-based hiring, with reports by Deloitte and the Center for American Progress describing it as an excellent solution to many of the problems the public sector currently faces. 

In the private sector, many large corporations such as Walmart, IBM, and Boeing have signed on to the Rework America Alliance, an initiative which aims to help future-proof the workforce, prioritize skill development, and set people up for success through skills-based hiring. 

Both the public and private sector are having a difficult time finding qualified talent, and skills-based hiring helps to break down the barriers that stand in the way of high-performing individuals who might not have a specific degree, but would make excellent hires. 

There's a number of reasons why organizations are increasingly turning to skills-based hiring to create a robust and sustainable future workforce. The next section will break down a few of the reasons why you should also consider looking into adopting a skills-based hiring approach. 

Advantages of Skills-Based Hiring

Increased Candidate Competency and Decreased Onboarding Time

One of the many benefits of skills-based hiring is that it helps TA teams refocus their efforts on candidate competency through the removal of arbitrary requirements.

At the heart of skills-based hiring is the drive to onboard individuals with the right skills for the job, and making sure that your entire recruitment team buys into this idea is the first step towards optimizing your recruitment outcomes. 

Consider the immense impact of a sub-par candidate being hired based on their educational criteria alone. Sure, they might tick all the boxes, but they might be a much worse fit for the position than a different candidate who lacks a specific degree.

Having a skills-based hiring approach is the antidote to this sort of situation, and ensures that candidates are able to make an immediate impact upon being hired without too much ramp-up time.  

Reduced Bias in the Hiring Process

Bias in recruitment is a pervasive issue that can hinder diversity and impede the identification of the most suitable job candidates. Skills-based hiring acts as a powerful antidote to much of the subconscious bias that tends to bleed into recruitment by refocusing attention on objective criteria.

By emphasizing skills over subjective factors such as age, gender, educational background, or other types of traditional criteria, organizations can create a fairer and more equitable hiring process. This not only promotes diversity and helps to break down bias in recruitment, but ensures that each candidate is evaluated based on their capabilities.

Many candidates from marginalized groups may not have the same qualifications and degrees that other candidates do, so taking a skills-based hiring approach is beneficial when it comes to creating a diverse and inclusive atmosphere in your organization. 

The benefits of skills-based hiring for diversity and inclusion are clearly seen when it comes to retraining of older workers and reducing age bias in the workplace. Much of the discrimination that older workers routinely face when searching for jobs can be limited by taking a skills-based approach and by encouraging them to showcase their own variety of skills, rather than focusing on more traditional CV taglines and an extensive work history. 

Increased Employee Engagement and Retention

At the core of employee engagement stands a simple premise: people love doing the things they're good at, and they especially appreciate it if their employer allows them to develop on the job. Studies show that a skills-based approach to employment results in a rise in employee engagement and satisfaction.

Workers feel seen and appreciated not only for their hard work, but also for the internal hiring opportunities that a skills-based approach to hiring can provide for existing employees. This boosts employee retention and ensures that valuable talent stays within your company.

Besides the benefit it can provide for existing employees, skills-based hiring is also a great way to ensure that new hires start off highly motivated. A heightened alignment between skills and job requirements contributes significantly to immediate job satisfaction for new hires, as they find themselves in roles that instantly resonate with their competencies. 

Moreover, the meticulous assessment of the candidate-to-job fit, a central tenet of skills-based hiring, directly influences the long-term success and retention of talented individuals within the organization, fostering a workforce that is not only proficient but also invested in the company's objectives.

A Widened Talent Pool

Another one of the standout advantages of skills-based hiring is its capacity to broaden the talent pool from which organizations draw their workforce. Traditional hiring methods often rely on narrow criteria such as educational background or even job descriptions and titles, inadvertently limiting the diversity of skills within the organization.

In contrast, skills-based hiring actively seeks out candidates based on their specific competencies, opening the door to a wider ranget of diverse candidates.

This expanded talent pool allows companies to tap into a wealth of qualified candidates with different hard and soft skills that may have been overlooked through conventional hiring practices, fostering innovation and adaptability within the workforce.

By focusing on what candidates can do rather than their formal qualifications, organizations can this hidden talent pool create a dynamic and resilient team that is better equipped to meet the challenges of a rapidly evolving business landscape.

Decreased Cost-per-Hire and Time-to-Hire

Finally, in addition to all of the benefits already outlined above, skills-based hiring also brings about tangible benefits in terms of cost-per-hire and time-to-hire. These types of financial and operational metrics are often used as the basis for assessing recruiter performance, and are almost always top of mind for most recruiting departments. 

Traditional hiring approaches often involve lengthy and resource-intensive practices, leading to increased cost-per-hire and extended time-to-fill vacancies. In contrast, skills-based hiring focuses on the essential competencies required for a role, enabling a more efficient and targeted recruitment process. 

This approach minimizes unnecessary expenses associated with prolonged hiring cycles as less time is spent on screening and interviewing candidates who may have the correct qualifications, but who are ultimately a poor fit for the role.

Skills-based hiring also reduces the time it takes to bring qualified candidates on board once they've entered the hiring pipeline. As organizations that implement more skills based hiring practices and prioritize the identification of specific skills over extraneous criteria, they can optimize their recruiting budgets and allocate resources more effectively, resulting in a more cost-effective and agile talent acquisition strategy

The Main Steps of a Skills-Based Hiring Process

So, how do you actually start a skills-based hiring process? 

Let's imagine that you're a recruiter who has been tasked with pioneering the skills-based hiring process for your company. We've broken it down for you step-by-step:

Step 1: Identify the Skills Needed for the Job

First off, you need to align with your team and, crucially, with your hiring managers, and come up with a list of skills to prioritize. You can also involve adjacent team leaders, and anyone else who the new hire would be working closely with. 

Make sure to consider both technical skills and soft skills, and not just the hard skills you would usually include on a boilerplate job description.

For instance, a software developer position may require technical expertise in a programming language like Java or C++, but effective communication, problem-solving skills, and a healthy dose of initiative and curiosity could be equally vital to consider.

Skills-based hiring is a holistic approach, and outlining the skills you wish to target should be equally holistic and plug all the potential skills gaps together. Once you've identified a specific breakdown of skills that sum up the candidate you wish to find, it's time to move on to Step 2.

Step 2: Create Skills-Based Job Descriptions

The next step is to craft a skills-based job description that will serve to attract potential candidates. A skills-based job description goes beyond the generic laundry list of acceptable college degrees and expected years of experience, and focuses instead on the unique skills that you identified and marked as crucial in the previous step. Make sure you use clear and concise language, tailored to resonate with candidates who may possess these skills.

A job description for a job posting seeking a project manager, for example, may highlight skills such as leadership, risk management, and effective communication. This reframing not only attracts candidates with the right skill set but also empowers potential applicants to conduct a self-assessment, aligning their capabilities with the articulated requirements.

Step 3: Evaluate Candidates' Skills

Skill assessment represents the linchpin of the skills-based hiring process. Once potential candidates are identified, organizations must deploy evaluation methods that directly align with the identified skills for the role.

This involves moving skills assessments beyond traditional metrics and embracing dynamic approaches such as practical tests, case studies, and skill-centric interviews.

For instance, a content marketing role might involve a practical task where candidates develop a brief content and SEO strategy for a specific group of keywords. Similarly, a programming position could include a coding challenge to evaluate technical proficiency, as well as a simulated code review with a senior on the same team. 

The goal is to create an evaluation process that mirrors the actual demands of the job, providing a more accurate representation of a candidate's abilities and their potential to excel in the position. It's less about what they've done in the past, and more about what they can do in the future, allowing you to prioritize candidates in terms of potential for future success. 

How to Implement Skills-Based Hiring

As organizations embark on the journey of transitioning to a skills-based hiring model, it's crucial to adopt a strategic and well-thought-out approach.

The best approach is to start by training and informing the most relevant stakeholders before branching out to the rest of the company in a structured way through specialized training sessions.

Building a Skills-Based Hiring Team

First off, make sure you focus on assembling a dedicated team or taskforce that can provide a large amount of specialized insight on what the benefits of skills-based hiring would look like. The skills-based hiring team should be a cross-functional collaboration, bringing together HR professionals, recruiters, hiring managers from various departments, and - if you really want to go all-out - even external consultants who are experts in skills-based hiring. 

This team will become the driving force behind the successful implementation of skills-based hiring within your company, and will help train your HR department, recruiters, other hiring managers, and the rest of your company. 

Training for Skills-Based Hiring

Transitioning to a skill-based hiring model is most effectively done with a dedicated training program for all involved stakeholders. These programs are designed to equip hiring managers and recruiters with the skills needed to effectively implement this model.

It's not just about theory, but is rather focused entirely on the practical application of skills-based hiring and the adaptation of traditional forms of recruitment. 

Hiring managers and recruiters, those who will most often come face-to-face with candidates, should undergo training that features both the theory of skills-based hiring as well as multiple practical exercises.. The end goal is for everyone involved with the hiring process to learn how to identify, articulate, and assess specific skills needed for different roles. 

Naturally, interview techniques also have to change. Since your recruiters and hiring managers will be primarily working from lists of identified skills that skills-based hiring requires, like the one we discussed earlier, it's often a good idea to institute a structured interview program to keep everyone on the same page and make training easier.

Case Studies: Successful Examples of Skills-Based Hiring

Here are some practical examples of companies that have successfully used skills-based hiring to boost their recruitment outcomes. 

Google

As a result of increasing skill gaps in the labor market, Google has turned to an increasingly skills-based hiring model. In addition to placing an emphasis on assessments and skills-based vetting,

Google's own workers can benefit from their internal Grow with Google program, which helps enable existing talent to continue upskilling and remain competitive in the rapidly changing labor market. 

IBM

IBM has long been a proponent of skills and competency based hiring models over traditional ones, going as far as pledging $250 million to their own apprenticeship program.

Over half of their job postings no longer require a traditional degree, and IBM's upper management has long been bullish on the tangible benefits that s skills-based hiring approach. 

Delta Airlines

Tech isn't the only industry where skills-based hiring is making inroads. Another great example of a company that is increasingly transitioning to a skills-based model is Delta Airlines, which is prioritizing it as part of a push to increase diversity and inclusion in their workforce. 

Conclusion

In conclusion, embracing a skills-based hiring approach is a transformative step that can revolutionize your recruiting outcomes. By prioritizing skills over traditional qualifications, employers can tap into a diverse pool of talent, fostering innovation and adaptability within their organizations. This approach not only addresses the evolving nature of industries but also promotes inclusivity, breaking down barriers that may hinder the advancement of underrepresented groups.