Without a doubt, skills-based hiring is growing rapidly across the globe. More employers are considering skills first rather than using the traditional resume method.
According to ZipRecruiter's 2023 survey of 2,000 employers, skills-based hiring is becoming increasingly common. An impressive 45% of those surveyed said they had eliminated degree requirements for certain positions in the past year, and 72% confirmed they engage in skills-based hiring practices.
Moreover, TestGorilla's 2023 report revealed that employers reduce their number of mishires by 88% by incorporating skills-based hiring into their recruitment process. In addition to reducing mishires, 85% of these employers reached their diversity objective. In other words, using the skill-first approach improves diverse hiring while ensuring a seamless recruitment process. Skills-based hiring is prevalent in various fields, including IT, business management, and marketing.
In this article, we'll examine how skill-based recruitment is shaping the future of recruitment and how technology and AI tools are propelling this shift. Read on!
The Shift to Skills-Based Hiring
The job market is changing, and companies are moving to skills-based hiring. Instead of looking at education or job titles, they are looking at what you can do. By doing so, they can match the right talent to the right role and have more efficient hiring processes.
Skills based hiring puts practical abilities and proven expertise over traditional markers of qualification such as degrees and certifications. This means employers can find talents who may not have followed the traditional career path but possess the required skills to do an exceptional job.
Moreover, it opens up opportunities for a wider range of people including those who have acquired their skills through non-traditional means such as boot camps, online courses or hands-on experience.
Why Traditional Hiring Methods are Failing
Traditional recruitment methods typically focus on experience and formal qualifications such as a bachelor's degrees, master's degrees, or Ph. Ds. They rely heavily on education and job titles to validate a candidate's potential. However, this method has proven to be misleading, as degrees do not necessarily reflect a candidate's true abilities or fit for the role.
Moreover, industries such as the tech space offer boot camps, masterclasses, and other programs that can turn a person with zero formal qualifications into an expert in their field.
One of the biggest problems with traditional methods is their inefficiency in sourcing the right talent. When degrees and job titles are prioritized, it becomes easy to miss out on highly skilled talents with practical experience for the job. Traditional methods often fail to identify and prioritize certain skills within candidates, which are crucial for the role. With this, building a capable workforce becomes a push-and-pull situation.
Additionally, traditional hiring methods can perpetuate bias and inequality. They tend to favor candidates from top universities or those who have worked in high-profile roles, marginalizing those who have acquired their skills through non-traditional means. In other words, the approach is rigged from the start and could increase the lack of diversity in workplaces. For instance, a person of color who went to a fairly good university and improved their skills to an expert level would likely not be prioritized over a candidate with a bachelor's degree from Harvard. It not only limits the talent pool but also reinforces the barriers to entry for underrepresented groups.
Skills-based hiring, on the other hand, mitigates these issues by evaluating candidates on their demonstrated abilities and potential. With this approach, candidates can have a more accurate and fair assessment, and better hiring decisions are made, creating an equal job market.
The Importance of Skills in the Hiring Process
As the job market continues to change, understanding the skills needed for each role is now a key strategy in recruitment. This means that as a recruiter, you can assess your candidates based on their skills and ensure they have what it takes to build your company. Here's why skills are essential in recruitment processes.
1. Better Talent Matching
By focusing on a candidate's skills, employers can better assess their fit for a specific role and ensure the selected individuals are actually capable of doing the job.
2. Wider Talent Pool
Skills-based hiring opens up opportunities for candidates from different educational and professional backgrounds, including those who may have gained their skills through non-traditional means such as online courses, apprenticeships, or self-study.
3. Less Bias
This approach reduces bias around educational pedigree and previous job titles and promotes a fairer recruitment process that values actual ability over traditional qualifications.
4. Better Talent Data
Skills based hiring requires a new way of collecting, enhancing, and maintaining talent data with skills as the basic unit of measurement. This allows for more accurate tracking and development of employee capabilities over time.
5. Employee Development
Focusing on skills means creating targeted training and development programs that address specific gaps and continuous growth of the workforce.
6. Job Satisfaction and Retention
When employees are in roles that align with their skills and interests, they will be more fulfilled and stay longer with the company, reducing turnover.
7. Competitive Advantage
Companies that implement skills-based hiring can adapt to market changes faster, innovate more efficiently, and maintain a competitive edge by having a workforce that is capable and agile.
The Benefits of a Skills-Based Approach
In addition to improving skill gaps, using this new recruitment approach has two main benefits for recruiters, companies, and talents:
Firstly, it fosters a skills-based organization, which emphasizes the value of individual skills and competencies over traditional job titles. This approach enhances flexibility, agility, and innovation within the organization, allowing it to adapt quickly to changing market demands and drive continuous improvement.
Secondly, it promotes a more inclusive and diverse workplace by recognizing and leveraging the unique strengths of each individual, leading to a more dynamic and effective team.
Expanding the Talent Pool
A skills based approach to hiring opens up the talent pool to a much wider range of candidates, beyond traditional sources. It's about finding people with the right skills, regardless of education or work history. Since the approach focuses on actual skills, more companies can find talent in places they may not have considered before, people who have gained their skills through online courses, self study and other non-traditional approach.
Improving diversity and inclusion
Skills-based hiring makes the recruitment process fairer by focusing on what candidates can do rather than where they studied. With this, organisations can attract and hire more minority candidates who may have been missed by traditional hiring methods that favour certain educational backgrounds or job titles. Placing value on alternative methods of skill acquisition, skills-based hiring creates a more inclusive workforce, which is key to business success. Moreover, a diverse and inclusive workforce brings different perspectives, drives innovation, and allows the company to serve a wider market.
Identifying Key Skills for the Role
Key skills for any role are the foundation of good hiring and talent management. A systemic approach to understanding and categorizing these skills, known as skills taxonomy, is essential. Knowing the required hard, soft, and cognitive skills allows organizations to create detailed job descriptions, assess candidates accurately, and align their workforce to business objectives. This process should be thorough, involve multiple stakeholders, and use technology to be precise and relevant.
Skills Intelligence
Skills intelligence is the backbone of a modern talent strategy. It's about collecting, analysing, and using data on skills to make informed decisions on hiring, development, and deployment of talent. This intelligence helps organisations stay competitive by understanding the current skills landscape, identifying gaps, and planning for the future. Before setting up any recruitment process, there's a need to have a clear view of the skills within the workforce and those required for future success. This allows more companies to navigate the complexities of the changing business world better.
AI for Skills Inference
Artificial intelligence can supercharge the talent management process by inferring skills that aren't on a CV. AI can analyse patterns in work experience, education, and other data points to identify potential skills. AI can also suggest adjacent skills a candidate could learn, widening the talent pool and opening up opportunities for upskilling and reskilling within the business. This helps uncover hidden talent and create a continuous learning and development culture.
Beyond Talent Data
Talent at the skills level is key to skills-based hiring. It goes beyond job titles and years of experience to what individuals can do. Skills-based organizations emphasize valuing individuals based on their unique set of skills, competencies, and potential. This shift creates a dynamic environment that values diversity and fosters creativity, problem-solving, and innovation.
Smart AI in Talent Management
Smart AI can help identify the skills required for each role and connect the dots to find the best talent. AI can analyse huge amounts of data to determine the most important skills for a role and match them to a candidate's profile. This makes the hiring process more accurate and efficient, gives a shorter time to hire, and improves the quality of hire.
Implementing Skills-Based Hiring
Skills-based hiring requires multiple assessment methods to measure different types of skills. Hard skills can be tested through technical tests with right answers, soft skills through behavioral interviews or situational judgment tests. Cognitive skills can be tested through psychometric tests or problem solving exercises. A comprehensive approach ensures all skills are measured accurately and gives a holistic view of a candidate's abilities.
Using assessments to measure skills
To support skills-based hiring the application and interview process needs to be overhauled. Traditional CVs which can be biased and don't reflect a candidate's skills accurately should be supplemented or replaced with application forms that focus on skills and competencies. These forms can include hypothetical or future oriented scenarios to test how a candidate would apply their skills in real life. This reduces bias and gives a more accurate picture of a candidate's potential.
Overcoming the Challenges of Skills-Based Hiring
Moving from traditional recruitment processes to skills based hiring (SBH) comes with its challenges. More often than not, hiring managers are resistant to the approach. And developing the right tools to assess candidates can be a challenge. Here's how to overcome them.
Reducing bias in the hiring process
Bias in the hiring process can be reduced by getting hiring managers and talent acquisition teams aligned to the skills-based approach. This alignment involves training on how to measure skills objectively and having conversations about skill development and learning. A dynamic view of skills creates a culture of continuous improvement and values diverse talent, which leads to better workforce and succession planning.
Getting hiring managers on board
Hiring managers are key to the success of skills based hiring. They need to understand the benefits and be trained on using the right tools and assessments. Investing in technology and data analytics can support this transition and make the hiring process more transparent and data driven. Hiring managers should be encouraged to buy in to this new approach and see the benefits to hiring outcomes and workforce agility.
The Role of Technology in Skills-Based Hiring
Skills based hiring will continue to grow as AI and the workforce changes. AI will be used more to analyse skills data, predict future skills needs and automate parts of the hiring process. Online learning and skills development resources will reduce the need for formal education, so individuals can learn more flexibly and organisations can tap into a wider talent pool.
Trends and predictions for the industry
- Given the overall recruitment and workforce trends, we can see that skills-based hiring will be used more.
- The use of AI will increase in scope and complexity.
- Workplace-relevant information, skills, and knowledge will be available online, reducing the need for formal education.
- Inclusion and diversity are the way forward in creating a dynamic workforce.
Best Practices for Hiring Managers
Organisations should follow a structured approach to move from experience based to skills based hiring. This means identifying the hard, soft and cognitive skills required for each role, developing the right assessment tools and continuously monitoring and improving the process. A formalised approach will ensure consistency and effectiveness in hiring.
- Define Role-Specific Skills: Clearly define and document the hard, soft, and cognitive skills required for each role so that all candidates are measured against the same criteria tailored to the role.
- Develop Assessment Tools: Create and implement assessment tools to measure the skills identified for each role. These can be skills tests, simulations, work samples, and structured interviews to evaluate candidates' actual skills.
- Structured Interviews: Use structured interviews where each candidate is asked the same questions related to the key skills for the role. This reduces bias and ensures a fair comparison of candidates' competencies.
- Leverage Technology and Data Analytics: Utilize hiring technology and data analytics to support skills-based hiring. These tools can track, analyze, and predict candidates' performance based on their skills so you make more objective decisions.
- Train Hiring Teams: Train hiring managers and interviewers on the importance and implementation of skills-based hiring. Make sure they understand how to assess skills effectively and how to avoid biases of traditional hiring methods.
- Continuous Improvement: Review and refine the skills-based hiring process regularly. Get feedback from candidates and hiring teams and use data to identify areas for improvement. This continuous cycle of evaluation and enhancement ensures the process stays effective and aligned with business goals.
- Promote a Skills-First Culture: Create a company-wide culture that values skills over traditional credentials. Encourage all levels of the organization to prioritize skills development and recognize employees based on their abilities and contributions so you can shift to skills-based hiring.
Finding the Right Tools and Assessments
Choosing the right tools and assessments is key to skills-based hiring. Organisations should use a combination of methods, technical tests, behavioural interviews, and cognitive assessments to assess different types of skills. Review and update these tools regularly to keep them relevant and effective. Through skills data organisations, more companies can make better decisions on talent management and workforce planning and get better outcomes.
The Future of Recruitment: The Rise of Skills-Based Hiring Globally
The era of fixed-job roles is over, replaced by agile and flexible workplaces that can pivot to new strategies and challenges. This is reflective of the modern workforce, where adaptability and continuous learning are more valuable than static qualifications. Many organisations are moving from experience and formal qualifications-based recruitment to skills-based hiring. This approach is about the individual's potential and ability to learn new skills to keep up with the fast-paced changes in today's work environments. As a result, organizations can respond better to market changes and technological advancements.
Talent shortages and technological needs are driving this new wave. According to the WEF 2023 report, over 85% of jobs in the next decade will be invented. This level of change requires a proactive approach to talent acquisition, skills, and potential, as opposed to traditional credentials. To navigate this landscape, companies need innovative solutions to find and attract the right talent.
Tech1M is a recruitment intelligence platform that uses AI and data analytics to streamline global talent acquisition. Discover how Tech1M can help you find and hire the best candidates and be ready for the future of work. Visit www.tech1m.com
