Skills-based hiring is a growing trend around the world, and with good reason. Companies are investing millions - and sometimes billions - of dollars into “future proofing” their employees by helping them re-skill and upskill. This is a sign that more and more organizations value depth of skill on their teams, rather than credentials or years of experience, and is a sure fire sign that opinions are shifting on what qualifies as a desirable candidate.
The root cause of this shift is performance. There’s a growing body of evidence showing that skills-based hiring leads to better performance and, ultimately, better results. It’s no wonder, then, that companies are taking notice. This article will walk you through how to jump on that trend.
What is skills-based hiring?
As mentioned, skills-based hiring is the practice of sourcing and screening candidates based on a combination of specific hard and soft skills required to do the job, rather than their years of experience or formal education. It’s a focus on what the candidate has done, and what they know, rather than who they know or where they’ve been.
Skills-based hiring flips a lot of the more traditional means of sourcing candidates on their head.
In traditional models, job descriptions and qualifications sections would lay out a few must-have credentials: think 5+ years of experience, and a Bachelor’s degree. Candidates will pre-screen themselves based on those qualifications and determine if it’s worth applying. If they do apply, then their resume is typically filtered through an ATS that weeds out applicants who do not have that many years of experience, or that specific degree. From there, qualified resumes are shortlisted and selected for interviews.
What this traditional process doesn’t account for are those individuals who may have all the skills and knowledge needed to do well in the job, but who don’t have those two requirements on paper. Those people will either not apply in the first place, or they will be automatically disqualified by the ATS, despite being potentially great candidates.
In skills-based hiring, the emphasis would shift from credentials to verifiable skills, knowledge, and outcomes achieved by the individual. The job description is written with a different focus, the ATS filters for skills-based parameters, and candidates are selected for interviews based on what they can do.
As you can imagine, this results in a fundamental shift in perspective into who a qualified candidate is, and how you form a cohesive and high performance workforce. Instead of filling your talent pool with people who share the same university credentials, you will see a more diverse mix of skills, perspectives, experiences, and backgrounds, leading to stronger performance and innovation.
What are the benefits of skills-based hiring?
Skills-based hiring offers two important, overarching benefits to companies. First, it ensures that recruiters are screening for the right variables that lead to the best performance, and not disqualifying candidates based on irrelevant credentials. Second, it will ultimately create a much more diverse workforce, and one that has the skills and knowledge to shift and adapt to movements in the market.
These two overarching benefits relate back to a wide range of sub-benefits to skills-based hiring, including:
- Not shrinking your candidate pool. Skills-based hiring ensures that you don’t automatically eliminate qualified candidates who don’t hold university degrees or overly specific credentials. By doing so, your candidate pool remains diversified, and large enough for you to be more tactical with how you shortlist candidates. In fact, if shrinking candidate pools or a lack of “qualified candidates” are a concern at your organization, switching to a skills-based hiring approach is a surefire way to dramatically expand your hiring pool.
- Making it easier to onboard and train candidates. Employees who are screened to match a defined skillset are easier to onboard and train, have a much better understanding of the job, and reach full performance output quicker.
- Giving opportunities to often overlooked candidates. Applicants who don’t possess the common credentials needed for senior or manager positions are often overlooked, regardless of the skills they’ve developed over their career. Skills-based hiring ensures that you have a system in place to identify these overlooked candidates, and to accurately screen their potential at your organization. Luckily, this shift is already taking place. Since 2019, there has been a 20% increase in managers being hired without 4-year degrees!
- Giving opportunities to those out of work due to Covid. While the numbers are shifting daily, there are an estimated 100 million plus people out of work at the moment due to the pandemic. Many of these workers have skills and experience that is likely transferable to different positions, and industries. By adopting skills-based hiring, organizations can give these people a chance to re-enter the workforce into positions that compliment and expand on their current skill-sets.
- Enabling more objective screening practices. Skills-based hiring removes the bias toward candidates with specific credentials and backgrounds. Often, especially in the case of degrees, this preference results in an unconscious bias toward people of specific socio-economic backgrounds. This bias can be limited or removed by focusing on what a candidate can do, rather than where they’ve been.
- Boosting employee retention and engagement. Did you know that employees without a 4-year degree tend to stay 34% longer than employees with a degree? There are likely a variety of reasons for this, but chief among them is that those individuals were likely hired because they had the right skills, and are doing the job that suits them best. This is another fundamental benefit of skills-based hiring. You are putting the right people, with the right skills, in the right job. This helps employees find deeper satisfaction and engagement in what they do, prompting them to stay longer and contribute more.
Last, but certainly not least, skills-based hiring forces employers to shift their mentality around who they currently have on staff, what they can do, and how they should be organized. When you go through this exercise, and take stock of your current skills bench, you can find new ways to maximize the output from your team, and identify opportunities for individuals to upskill, reskill, or shift into more suitable positions.
4 challenges of skills-based hiring
Of course, anything as significant as turning traditional candidate screening on its head will come with some challenges. Here are some considerations to take into account if you’re looking to adopt skills-based recruitment.
- It requires a fundamental shift in how you screen candidates. This includes shifting how recruiters, hiring managers, leadership, and individual team members think about what constitutes a qualified candidate. This can take time, and requires you to demonstrate the benefits of hiring for skill, rather than credentials.
- You need to adopt reliable skills testing techniques. If you’re screening candidates based on skills, you need a reliable, and scalable, way to test those skills. If you don’t do that already, this is an extra step you’ll need to add. As such, it will require you to test screening options, and incrementally refine your hiring process.
- It may lead to push back in your organization. It’s possible that there will be an old guard and new guard mentality at your organization. In these cases, you may have employees and leaders who value traditional credentials as a way of determining potential and merit. As such, you will need to work out the best way to navigate internal dynamics at your company.
- You need to be sure about the skills you’re screening for. Skills-based hiring means that you must be able to reliably identify and define the skills required for each role you’re promoting. This will require closer alignment between recruiters, hiring managers, and teams to ensure that the right screening credentials are focused on.
Of course, nothing worth doing comes easily. Now that we’ve talked about the benefits and challenges of skills-based hiring, let’s look at some tips for how to implement it.
7 ways of adopting skills-based hiring in your company
While there is no one-size fits all approach here, there are some skills-based hiring best practices you can follow to make this transition easier.
Here are seven tips we recommend.
1. Rethink your job descriptions
Instead of focusing on job requirements or must-have credentials, focus on responsibilities and outcomes for the role you’re promoting. Clearly state the kind of performance you expect from the chosen candidates, and what skills they’ll be using on a daily basis.
By doing so, candidates are able to determine for themselves if their skills will match what’s required from the role, without being bogged down by whether or not they have the listed credentials.
This is a growing trend, thanks to the rise in skills-based recruitment. LinkedIn has seen a 21% increase in job postings advertising skills and responsibilities, rather than qualifications and requirements. And, the number of job postings on LinkedIn that don’t require a degree increased by nearly 40% from 2019 to 2020.
2. Change your ATS filtering
This tip seems obvious, but it can be easy to forget. If you’re screening for specific skills, you need to ensure that your ATS is set to filter resumes for specific terms associated with those skills. Also consider including search terms that indicate the types of results you’ll need from the role. For example, terms like growth, leadership, efficiency, and so on.
Of course, you should also remove your existing screening parameters that target years of experience and education where applicable.
3. Test skills early in the hiring process
Because you’re emphasizing skills above all other screening parameters, you need to ensure that you’re able to test, or at least verify, a specific skill early in the hiring process (as in before the interview phase).
To do so, you can leverage digital credentials to verify whether or not candidates have a specific skill. This, however, is not necessarily scalable across all roles. Additionally, you could consider including a basic skills assessment after the application to test core competencies.
4. Focus on skills in the interview phase
Hiring managers and potential team mates are typically the best people to determine if a candidate has the adequate skill set for the job. As such, you should encourage interviewers to weed out more information about the candidate’s skills and past performance.
This could include using structured interview questions to prove the candidates knowledge of specific skills or workflows. Ask for specific work examples and results that map back to your skills focus. You can also have other team members join the interview process to help determine the candidate’s competency level, skills, and knowledge.
5. Use job auditions to probe deeper
After the interview phase, it’s a good idea to ask the candidate to complete a real-world exercise that demonstrates their skill set. This will be your final round of screening to ensure that the candidate has the competencies you need.
This might include tests for hard skills (like writing, coding, data analysis, etc.), soft skills (communication, presentations, collaboration, etc.), or a combination of the two.
6. Select candidates based on demonstrable skills
After all screening phases are completed, review the results as a hiring team to determine which candidate best demonstrated the required skill set.
Select the candidate who achieved the best results during each phase of the process, and who has demonstrable experience that relates to your specific job opening.
7. Make skills training a priority
The final component of skills-based hiring is what comes after a candidate joins your company: growth. If you’ve gone through the process of emphasizing skill amongst your workforce, you should also include opportunities for upskilling and reskilling for all employees.
This involves nurturing a culture of learning and experimentation, and providing the resources and time needed for employees to upgrade their skills. It’s also a good idea to keep an eye on market trends to determine which department and individuals will require upskilling in the future.
Lastly, in order to shift your organization from an emphasis on credentials to skills, you need to clearly identify the strategic north star for the company and for individuals. In modern, skills-based organizations, knowledge growth and end results should be that north star for individual and collective success, rather than letters after a name or years in a seat.
Skills-based hiring requires a fundamental shift in both your hiring process, and your organization’s perception of success. It can be challenging, but the results both from a business and a people perspective are well worth the effort.
