Skills Based Hiring: Why It’s the Future of Work
What is Skills Based Hiring?
Skills based hiring is exactly what it sounds like – hiring based on skills. It’s a way of choosing new employees that looks at what they can do in the workplace instead of traditional criteria such as degrees or years of experience. This hiring method focuses on actual experiential abilities rather than their background or certificates.
The tight labor market has moved toward skills-based hiring, gaining traction in public and private companies. For instance, state governments are no longer requiring degrees for many positions in order to attract those “diamonds in the rough” who gained their experience on the job instead of in the classroom.
In the private sector, companies such as Dell, Accenture, IBM, and Amazon have joined the trend, too.
As the workforce becomes increasingly diverse and the nature of work continues to change, skills-based hiring offers a fresh perspective on how to build strong, adaptable teams.
The future is here, so how can your organization adapt?
What is Involved in Skills Based Hiring?
When you implement skills-based hiring, you look at the core skills required for a role and assess candidates based on those specific abilities. This could include technical skills, soft skills, or a combination.
For example, instead of requiring a degree for an administrative position, you can test candidates on their basic computer skills such as Microsoft Office Skills, typing and data entry skills, and soft skills like emotional intelligence.
Does that mean your talent acquisition strategy needs to change? Yes, but not as drastically as you might think. Keep reading to get tips and tools to help with this transition.
The Need for Skills Based Hiring
The change to prioritizing hiring based on specific skills over traditional qualifications is driven by several important factors.
Labor Shortages
The US job market is currently facing significant shortages. Gartner reports that nearly 83% of human resources leaders are struggling to find enough talent with the necessary skills to fill their open positions.
The World Economic Forum believes that “a skills-first approach can help alleviate the talent crunch in many sectors.”
Changing Job Requirements
As industries evolve, the skills required for various roles also change. Companies need to be quick in identifying and hiring candidates with relevant skills that might not match traditional job titles or experiences. Because let’s face it, there can be quite a bit of creativity encompassed in the popular job description phrase “other duties as assigned.”
Diversity and Inclusion
Skills-based hiring promotes a more inclusive workforce by removing barriers that often exclude qualified candidates from underrepresented groups. This approach helps create a diverse talent pool that can drive organizational innovation and creativity.
The Benefits of Skills-Based Hiring
Implementing a skills based hiring approach offers numerous advantages for organizations.
Better Matched Candidates
Companies can better match candidates to roles by focusing on skills, leading to improved job performance. Studies show that employees whose skills align with their job responsibilities tend to be more engaged and productive.
Increased Employee Retention
A skills-based approach encourages a culture of ongoing learning and development. According to McKinsey, hiring for skills is five times more predictive of job performance than hiring based on education. Employees are more likely to stay with companies that invest in their growth.
Broader Talent Pool
Skills-based hiring widens the talent pool by allowing organizations to consider candidates from diverse backgrounds who may possess relevant skills acquired through non-traditional paths. This inclusivity can lead to a more dynamic and resilient workforce.
Cost-Effectiveness
Skills based hiring can reduce the cost-per-hire and time-to-hire. Organizations can streamline their recruitment processes by focusing on specific competencies, making them more efficient and effective.
Future-Proofing the Workforce
As technology and AI continue to reshape the job market, skills-based hiring allows organizations to identify candidates with competencies that are less likely to be automated. This foresight ensures that companies remain competitive and adaptable to future challenges.
How can Organizations Succeed With Skills Based Hiring?
To succeed in skills-based hiring, embrace a strategic approach prioritizing competencies over traditional qualifications.
Here are some actionable steps your company can implement as you transition to hiring based on skills.
Create a Skills Based Hiring Plan
Start by clearly defining your organization’s overall strategy and goals for skills-based hiring. For example, is your company aiming to hire for a more diverse workforce, or streamline your hiring process?
(Pro tip: Download your free Planning Worksheet here!
Assess Skill Needs
Clearly define the essential technical and soft skills required for success in each role. This involves a deep understanding of the job responsibilities and the abilities needed to perform them effectively.
Go beyond generic skills like “communication” or “teamwork.” Instead, focus on specifying the concrete competencies that are truly critical.
Revise Job Descriptions
Rewrite job postings to emphasize the required skills rather than qualifications. Use inclusive language that encourages applications from diverse candidates, avoiding unnecessary restrictions like degree requirements.
Clearly outline the specific skills you’re seeking, along with any relevant assessments or tests applicants may encounter.
Maximize the Use of Skills Assessments
Use pre-employment tests along with evaluation methods to assess candidates’ abilities accurately. Objective assessments can help identify hard skills like basic computer skills, as well as essential soft skills such as emotional intelligence, attention to detail, and key personality traits, which are increasingly valuable in the modern workplace.
Training and Development
Consider implementing apprenticeship or in-house training programs for positions where it’s difficult to find candidates with the exact skills needed. This approach helps companies to develop talent internally, paving the way for promoting from within.
The Future of Hiring is Here: Can You Keep Up?
The shift towards skills based hiring reflects a bigger change in how organizations find and hire the right candidates. Embracing this more equitable way of talent acquisition also means that you are future-proofing your workforce, staying ahead of the competition, and unlocking the full potential of your most valuable asset: your employees.
Experience the future of recruitment and book a consultation with our expert team today!