How Skills-Based Hiring is Transforming Talent Acquisition 

Many people now understand that having good grades or attending a prestigious school doesn’t fully guarantee success at work. While a strong academic record might show potential, it’s not the only thing that predicts how someone will perform on the job.

Amie Lawrence, Ph.D., the former Director of Global Innovation at Talogy, pointed out that qualities like adaptability, quick learning, teamwork, and integrity are often better indicators of success than educational background.¹ More and more, companies are prioritizing skills-based hiring because they see it works better and is fairer.

What is a Skills-Based Hiring Approach?

Skills-based hiring is a recruitment strategy that looks at what someone can do instead of just their degrees or past jobs. This method concentrates on the skills needed to do a job well rather than just the usual signs that someone might be successful.

In skills-based hiring, companies figure out the main skills needed for a job—this can include coding, writing, operating machines, digital marketing, and even soft skills like interpersonal communication. They then check if candidates can do these things by giving them tests, looking at how they’ve performed tasks before, or reviewing their work history in detail. This approach is useful in jobs where being able to do the work and keeping up to date with knowledge matters more than having a college degree.

Why Move Towards Skills-Based Hiring?

The U.S. job market is facing several challenges that are pushing employers to adopt skills-based hiring. In the middle of fast-paced technological changes and the shortage of skilled workers, one major challenge is the skills gap—this is the disconnect between the employer’s expectations and an employee’s existing set of skills.

A survey by Manpower Group found that 75% of employers are struggling to fill job positions.² This means there are lots of job openings but not enough people to fill them. On top of that, research shows that about 62% of Americans don’t have a college degree.³ Requiring a degree automatically excludes this percentage of adults who could work.

Because of this shortage of skilled workers, more and more companies, and even the U.S. government, are rethinking the need for college degrees when hiring. In 2020 and 2021, the White House announced limits on using educational requirements, especially for hiring IT professionals.⁴ They want to give smaller businesses a fair chance to compete for government contracts, even if their employees don’t have college degrees.

Companies like Google, IBM, and Apple are moving in this direction, too. They’re realizing that smart and talented people don’t always have diplomas. For example, in 2021, IBM said it removed the need for a bachelor’s degree from over half of its job postings in the U.S., and they’re thinking about dropping degree requirements even more in the future.⁵ These changes are leading other companies to do the same, marking a big shift in how companies build their talent pool.

Benefits of Skills-Based Organizations

Moving towards skills-based hiring brings many advantages for both employers and job seekers. Here’s why:

Improved Hiring Outcomes

A survey by TestGorilla found that 88% of employers who use a skills-based approach have fewer hiring mistakes, and 89% have better employee retention rates.⁶ When people are hired for their skills, they usually feel more excited and fulfilled in their jobs because they get to use what they’re good at. This leads to getting more done and fewer people leaving their jobs.

Enhanced Workforce Capability

Hiring based on skills means your team has the right abilities to handle both present and future challenges. This strategic match between what your company needs and what your employees can do can help the company grow and work more effectively. It also puts the company in a stronger position compared to its competitors.

Reduced Bias

Traditional hiring practices, like looking at resumes and conducting interviews, can be affected by unconscious bias. Things such as where someone went to school, their name, or how they look might sway hiring choices, even if those things don’t really matter for the job.

Skills-based hiring, however, helps reduce bias by focusing on fair assessments and standard ways of judging candidates. By concentrating on skills that are directly related to the job, you give all candidates an equal chance. This means your organization can pick the best person for the job based on what they can do, not where they come from.

Recognition for Non-Traditional Learning

Nowadays, people who’ve learned skills from online courses, boot camps, or teaching themselves have a chance to show off what they can do and stand out. Skills-based hiring lets candidates prove their expertise, no matter where they learned it.

This gives opportunities to people who might not have a traditional college degree but still have the skills to do well in a job. For instance, a web developer who learned coding from online tutorials and personal projects can apply for jobs against candidates with computer science degrees, if they can show they’re good at coding through tests and showing their work in a portfolio.

Increased Job Opportunities

Using a skills-based approach lets people without traditional education qualifications but with the right skills for a job have more job opportunities. This makes it easier for them to find work. It also helps people switch careers by letting them show off skills they’ve learned outside their current job field.

Focus on Ability, Not Background

Skills-based hiring lets job candidates be judged on what they can do, not where they come from or if they went to college. This makes things fairer and gives chances to diverse candidates from groups that don’t usually get as many opportunities. These people might not have had the same advantages in education as others, but if they have the skills, they can still compete for jobs.

5 Practical Strategies to Implement Skills-Based Hiring

Even though the advantages are obvious, switching to a skills-based hiring practice might seem unclear, especially for the candidate’s experience. Here are some simple steps you can follow to make this change in your talent acquisition process smoothly:

1. Redefine Job Descriptions

Instead of focusing on degrees and years of experience in work descriptions, prioritize finding the exact skills and abilities needed for each role. This could mean analyzing tasks or talking to current employees to understand what skills are necessary for doing the job well daily.

2. Use Skills Assessment Tests

To accurately measure a candidate’s skills, you can use different assessment tools like practical tests, simulations, or reviewing portfolios, depending on the job. These can be tailored to assess the hard skills or soft skills you’re looking for in a candidate. These assessments not only give a good idea of what a candidate can do but also help cut down on biases that might affect hiring choices.

3. Make the Most of Technology

Advanced algorithms and generative AI can assist in matching candidates’ skills with job needs. Nowadays, many HR software tools have features that analyze resumes and applications to find matches with the required skills, making the screening process faster and less likely to be influenced by human error.

4. Train Hiring Managers

Changing how you hire means changing how people think and work in the hiring process. Organize training sessions for HR staff and hiring managers to help them adjust to skills-based hiring. This training should teach them how to spot and evaluate skills well and how to make fair hiring choices without biases.

5. Promote a Skills-Based Culture

For skills-based hiring to work well, it needs to be part of a bigger change in the company’s culture. Ensure to stress the importance of always learning and improving skills. Boost employee morale by encouraging them to learn new skills and move up in their careers within the company based on what they can do.

IF YOU’RE LOOKING FOR IDEAL CANDIDATES, HUGHES RESOURCES CAN HELP!

Hughes Resources has helped over 6,000 people find skills-based jobs in clerical, industrial, and professional fields. Whether you’re a company needing to fill an important role or someone looking for a job that values your skills and goals, we’re here to help.

Our team is dedicated to making the connection between employers and job candidates smooth and successful. Apply for jobs on our career page or contact us to learn how we can help you fill job openings quickly and well.

References

1. Lawrence, Amie. “The top 5 qualities that lead to high job performance” Talogy, Accessed 10 May 2024, talogy.com/en/blog/the-top-5-qualities-that-lead-to-high-job-performance/.

2. “2024 Global Talent Shortage” Manpower Group, Accessed 10 May 2024, go.manpowergroup.com/talent-shortage.

3. Weber, Lauren. “62% of Americans Lack a College Degree. Can They Solve the Labor Shortage?” WSJ, 16 Feb. 2024, www.wsj.com/lifestyle/careers/employers-open-more-doors-to-workers-without-degrees-but-few-are-getting-in-732f1098.

4. “Limiting Use of Educational Requirements in Federal Service Contracts” Executive Office of the President, 11 Jan. 2021, www.whitehouse.gov/wp-content/uploads/2021/01/Limiting-Use-of-Educational-Requirements-in-Federal-Service-Contracts.pdf.

5. “How the US can Lead in Education and Build a More Equitable Economy” IBM, 28 Jan. 2021, www.ibm.com/policy/education-skills/.

6. “47 key skills-based hiring statistics” TestGorilla, Accessed 10 May 2024, www.testgorilla.com/blog/skills-based-hiring-statistics/.