How you can implement skills-based hiring
Skills-based hiring has well and truly increased in presence across the world of work. Organisations have recognised that continuing to stick to traditional criteria such as formal qualifications when hiring will leave them behind in a highly competitive market. Around three-quarters of companies test job seeker’s skills multiple times during their interview process1, and nearly 75 per cent are now focusing on skills when recruiting for specific roles2. The companies that have started using skills-based hiring practices are also citing significant benefits, including saving on hiring costs, less time spent on searching for talent and limiting unsuitable hires.
It begs the question, with more employers than ever starting to embrace skills-based hiring and seeing the benefits of it, will resumes become a thing of the past? There can still be significant barriers in enabling your business to undertake skills-based hiring but breaking these down could be key to you being able fill roles during ongoing talent shortages.
What is skills-based hiring?
Skills-based hiring is an approach to attracting and retaining talent that pulls focus away from university degrees and other formal education. It instead shifts the focus onto a candidate’s skillset. Relying on educational requirements puts organisations at risk of throwing out the applications of perfectly good candidates who otherwise align well with the role in question.
The practice is gaining in popularity to unlock talent who may not have taken up the traditional career path as we know it, and helps businesses find the skills they need, or someone with the potential to succeed in the role.
What are the benefits of skills-based hiring?
Expanded talent network
The biggest advantage to skills-based hiring is the broadening of the talent pipeline you have access to. The market remains tight when it comes to skills, so implementing a skills-based hiring approach can be of huge benefit.
Increased quality of hire
If a degree takes precedence over all other criteria, it has potential to lead to some poor hiring decisions. When the wrong person is hired, it’s costly for your organisation, but when companies implement skills-based hiring, candidate quality increases, with 92.5 per cent of surveyed companies seeing a reduction in mis-hire rate3.
Future-proofing your roles
Skills-based hiring opens new doors when it comes to how career paths and learning are defined across your organisation. In a world where the half-life of skills is now less than five years4, focusing on hiring for soft skills means you can onboard talent for potential, rather than their formal qualifications which may not be as relevant down the road. Targeted learning interventions once they are onboarded can create paths to internal mobility and filling technical skills gaps, further future-proofing your organisation.
Cutting down the search process
The time between when a jobseeker appears in your system and then gets a job offer, can be drastically cut down by using the skills-based process. This is because hiring managers and HR teams can more quickly identify and rank applicants based on their skills.
Improving retention rates
Skills-based hiring can lower turnover by aligning job descriptions with candidates' skills, making them more likely to find the right fit despite the absence of a degree. Hiring for skills is actually five times more predictive of job performance than hiring for education, and employees without degrees stay in their roles 34 per cent longer than those with degrees5.
Increased diversity and bias reduction
People that come from underrepresented groups are less likely to have university education due to financial pressures6, which can go on to exclude them from specific industries or roles they may want to break into. Skills-based hiring realigns the focus to criteria relevant for the job and can build more diverse teams as a result. It allows all candidates to be considered equally as long as they prove they can do the work.
An example of improving diversity is manufacturing company Steelcase, who adopted practices such as prioritising skills over pedigree, favouring continuous improvement and prioritising diversity in an effort to build a fairer place for employment opportunities. These practices allowed Steelcase to reach a diverse talent goal organically, with new hires being 55 per cent women and 30 per cent racial or ethnic minorities since the program started7.
Potential barriers to skills-based hiring
While the facts are in plain sight for the benefits of skills-based hiring, it doesn’t mean that everyone will be on board for skills-based hiring methods. New data has revealed that there continues to be barriers for jobseekers without degrees and therefore underrepresented workers, as underlying biases remain in recruitment processes. While 35 per cent of large companies and 47 per cent of SMEs dropped their degree requirements for some roles, more than half cited that hiring managers were a barrier to hiring more underrepresented workers, with the hiring managers in question insisting that candidates have qualifications that aren’t necessary for the job2.
So, while you can make progress and not have a degree required in the job description, the actual person doing the hiring could still be insistent on it being a key piece of the hiring criteria. It takes more than just omitting a few details on the job advertisement.
Being able to validate the skills prospective employees put forth is also a key challenge. While you may feel confident to remove any degree requirements, it can be difficult to then evaluate a candidate’s proficiency in certain skills just through an interview process. For example, a hiring manager may question if there is any other way someone could source the required skills without having had the years of experience behind them in a related role8.
How you can start to implement skills-based practices
You should begin implementing skills-based hiring by starting with quick wins. You can begin by simply removing degree requirements from job postings for selected positions or departments. Keeping an eye on the long-term plan will better your chances of success though, so work towards having skills-based practices across the whole employee lifecycle so it’s not just present at the attraction stage, but also onboarding and development.
At the onboarding stage, you can ensure that a new employee will be equipped to succeed once they begin by interviewing them based on skills rather than other methods such as basing their hiring on a cultural fit or having the right degree. Behavioural and situational interview questions are an excellent way to surface examples of how a candidate can demonstrate a specific skill.
In the development stage, using skills-based practices can help you to quickly and accurately identify learning opportunities for new hires and ensure that they have the skills needed to succeed in the long term. This ensures they have a pathway to progress within the company without needing a degree.
Employees are now more aware than ever of the power their skills have and how it can open new doors for their career. Implementing skills-based hiring will help to broaden your talent network and unearth talent at risk of staying hidden just because they don’t have a degree or better educational background. While skills shortages are still rife, now is the time to begin committing to these new practices and ensuring its integration within your organisation.
[2] https://www.fastcompany.com/90965293/jobs-without-college-degree-skills-based-hiring-barriers-survey?cid=other-eml-onp-mip-mck&hlkid=52a6600195d24a4aaca9a2af38967b4a&hctky=13284892&hdpid=697637d9-e968-45b3-8e0f-60635a89fb91
[3] https://www.forbes.com/sites/carolinecastrillon/2023/02/12/why-skills-based-hiring-is-on-the-rise/?sh=22cc412224a9