Skills-based hiring, also known as skills-first hiring, is a talent acquisition strategy where the primary focus is on the candidate’s abilities and skills rather than their educational background or traditional career paths.
This approach allows employers to evaluate candidates based on their practical capabilities and potential rather than credentials, such as a degree. Studies have shown that this method can be up to five times more effective than traditional hiring practices that prioritise formal education.
Why the shift toward skills-based hiring?
A recent report highlights that over three-quarters of businesses now incorporate skills-based hiring in their recruitment process, with more than half conducting role-specific skills assessments. In the United States, LinkedIn has seen a 21% rise in job listings that emphasise skills over specific academic qualifications.
This shift is largely driven by the pandemic and other global disruptions, which have transformed the way businesses operate and recruit talent. As companies grapple with a challenging global economy, hiring managers face difficulties in attracting top talent. Skills-based hiring has emerged as a solution to this issue, expanding the talent pool by focusing on candidates’ actual abilities.
Skills-based hiring vs soft skills hiring
While both skills-based and soft skills hiring are growing in popularity, it’s essential to recognise the difference between the two. Skills-based hiring encompasses both hard and soft skills, providing a more holistic view of a candidate’s capabilities. In contrast, soft skills hiring focuses exclusively on interpersonal and emotional intelligence traits, such as communication and teamwork.
The benefits of skills-based hiring
In today’s competitive job market, the benefits of a skills-based approach are evident. Here are some key advantages:
- Better job fit and increased retention
Companies are increasingly looking past degrees in favour of relevant skills, which is paying off. LinkedIn research shows that companies focusing on skills are 60% more likely to hire the right person for the job. When employees are a good match for their roles, they are more likely to stay with the company, perform better, and positively influence workplace culture. Happy, well-matched employees contribute to better retention rates, reducing turnover and associated costs.
- Expanded talent pool
Currently, 75% of businesses report challenges in filling open roles, but skills-based hiring can help overcome this hurdle. By focusing on practical abilities, employers can tap into a wider range of candidates, including those who may not have followed a traditional career path. For example, a cashier might possess 68% of the skills needed for an office assistant position and 79% of the competencies for a customer service role. This approach opens doors for people from various backgrounds, improving diversity and social mobility within the workplace.
- Increased employee loyalty
Employees who are hired based on their skills, rather than formal qualifications, tend to show greater loyalty to their employers. Data suggests that employees without a four-year degree stay in their positions 34% longer than those with traditional qualifications. These individuals often feel more invested in the company that gave them a chance, further contributing to higher retention rates.
- Building a diverse workforce
Skills-based hiring inherently promotes diversity, as it removes barriers related to education, geography, and socioeconomic status. This approach helps level the playing field, allowing individuals from underrepresented groups to compete on equal footing. It fosters the development of teams with a variety of perspectives, experiences, and innovative approaches to problem-solving, ultimately benefiting the company’s bottom line.
How to implement a skills-based hiring strategy
- Write clear, skills-based job descriptions
A crucial step in adopting a skills-first approach is crafting job descriptions that focus on the skills required for the role, rather than listing non-essential qualifications. For example, a person who blogs as a hobby could have the skills to be an exceptional copywriter, even without a degree in English or marketing. By highlighting specific tasks and expected outcomes, businesses can attract candidates who possess the necessary skills but may not have a formal education.
- Adopt blind applications to reduce bias
Even with the best intentions, unconscious bias can seep into the hiring process. Recruiters may gravitate toward candidates with degrees from prestigious universities or with experience at well-known companies. To avoid this, consider using blind applications where details such as the candidate’s name and educational background are hidden. This minimises name bias, which research shows can disproportionately favour Anglo-sounding names. By focusing solely on skills, you increase your chances of building a diverse and capable workforce.
- Utilise skills-based assessments
Skills-based tests offer a concrete way to measure a candidate’s capabilities. For example, if you’re hiring a content writer for a fashion brand, you could ask them to draft a blog post on men’s summer fashion. This exercise allows you to assess not only their writing ability but also their research skills, tone of voice, and understanding of brand identity. Practical tests like these can be more revealing than relying solely on interviews or reviewing resumes.
- Seek skills-based references
When reaching out to previous employers for references, shift the focus away from academic achievements and towards the candidate’s demonstrated skills. Ask questions about how the individual’s skills impacted the business and whether they achieved notable accomplishments. Peer references can also provide valuable insights, as colleagues often have a closer perspective on the candidate’s daily contributions.
Additional considerations: Up-skilling and career development
Incorporating skills-based hiring is not just about hiring the right people; it also involves investing in employee development. Offering training and upskilling opportunities helps employees refine their existing skills and learn new ones, ensuring they stay relevant in a rapidly changing job market. Furthermore, providing clear career progression pathways based on skills rather than tenure or degrees can boost employee morale and loyalty.
The bottom line
Skills-based hiring represents a significant shift in how companies approach talent acquisition. By focusing on what candidates can do, rather than how they acquired their skills, businesses can cast a wider net, attract top talent, and build a more diverse and dynamic workforce. This approach not only helps companies find the right fit for open positions but also promotes long-term success by fostering higher retention rates, improved performance, and employee satisfaction.
References:
- LinkedIn. (2021). “LinkedIn Global Talent Trends 2021.” Available at: https://business.linkedin.com/talent-solutions
- Asana. (2021). “The hidden cost of bias: Why name bias harms your hiring process.” Available at: https://blog.asana.com
