Why Skills Based Hiring is the Future of Recruitment
Could focusing less on educational attainment and more on relevant skills be the answer to faster, more effective hiring? The British-American publishing giant Penguin Random House saw 33% higher employee satisfaction when it eliminated degree requirements across its UK office. Applicant diversity rose, and creativity within the team also increased.
Speaking on what made them take this unusual step in hiring, the Group HR Director, Neil Morrison, said:
"There was increasing evidence that there is no simple correlation between having a degree and ongoing performance in work. We want to attract the best people to help grow and shape the future of our company, regardless of their background - and that means that we need to think and act differently.”
Another example is that of the Tech Giant Tesla. Tesla CEO Elon Musk said a college degree isn't required for a job at Tesla. The company screens people for technical abilities and career trajectory. LinkedIn’s Global HR Community also reports that even organisations like IBM, Google, and Deloitte have dropped degree requirements for certain roles and have seen great results in terms of ROI, efficiency, and retention.
They all agree on the same thing: skills get the job done. Whether gained from attending a prestigious university, an online course, or an apprenticeship, doesn’t matter.
Removing academic barriers or experience expectations and hiring for skills is the future of recruitment. Skills based hiring improves performance, inclusion, and innovation in workplaces.
What is Skills Based Hiring?
Skills based hiring is a recruitment process where professionals are evaluated based on their skills rather than education or work experience. While it does not completely disregard a professional’s experience, it recognises that degrees or job titles aren’t necessarily the best measure of a good fit for a role.
Skills based hiring prioritises aptitudes and abilities. It lets organisations identify talent overlooked in traditional, experience-based processes.
Imagine the difference in applications if, instead of saying "Master’s degree" in the job description, you said "examples of KPIs of how you helped to grow revenue". You would open doors to a wider talent pool with more creativity and enthusiasm.
Why Use Skills Based Hiring?
Traditionally, organisations hire for experience, using CVs or interviews as benchmarks. But this approach falls short, especially as technology evolves rapidly. Here are some of the reasons organisations have moved to include more skill based hiring:
- 1. The Rise of AI-Generated CVs
With easy access to AI tools, candidates use AI to create CVs, write cover letters, and fill out application forms. As a result, organisations are seeing a huge influx of perfectly crafted CVs with targeted cover letters. The quality of CVs can no longer be associated with the quality of hire. This has prompted organisations to use alternative hiring methods like skills based hiring. - 2. Changes in Education
The way people learn has changed. Many see attending a prestigious university or getting a degree as less important than acquiring critical skills in the workplace. With career-focused, short-term courses available, the traditional way of learning is changing, focusing organisations to move from qualification based hiring to skills based hiring. - 3. The Growth of Emerging Roles
How can organisations find candidates with several years of experience in a relatively new technological development role? Only by hiring for transferable skills and removing rigid requirements like specific degrees or years of experience can such emerging roles be filled with qualified candidates. - 4. The Increase of Remote Working
Remote working opened a wider talent pool for organisations as they could hire talent from anywhere in the world. This made traditional interviews difficult and also led to an improved focus on ensuring the cultural fit. Video interviews and additional skills based assessments have been helping organisations in this scenario to find the right fit. - 5. The Need for Human Skills
Human skills are considered a very important factor in today’s hiring market. Questions like, “Can the candidates deal with change? Are they emotionally resilient? Are they able to stick to values when things are challenging?” can often take precedence over questions about candidates’ work experience or academic background.
Benefits of Skills Based Hiring
When CVs cannot help to make an informed decision, and previous work experiences don’t give enough insights into the candidates’ performance, skills-based hiring comes into play. It gives solutions to all the recruitment challenges organisations face.
- 1. Better Predictions for New-Hire Productivity
Predictive validity is a psychometric concept that refers to how well a test score or assessment can predict the future outcome or behaviour. It helps organisations ensure that they are hiring the right fit and encourages productivity and retention. Skills based hiring maximises predictive validity through methods that measure the role-specific skillsets. - 2. Access to a Wider Talent Pool
Many organisations face talent shortages. But what they don’t realise is that they are unknowingly contributing to it. When organisations hire with a rigid focus on experience levels or degrees, they narrow down their talent pool to a minimum.
By moving away from this traditional hiring and focusing on skills, they can access a wider talent pool. It helps organisations discover people who may have taken an unconventional education or career path and are more fit for the role than those with a degree and experience. - 3. Better Job Performance
When candidates are evaluated based on their skills and not qualifications, they feel seen and validated. This creates a positive impact and makes them feel confident and capable. This mindset reflects in the work that they do and motivates them to use the skills for the best of the organisation. - 4. Higher Retention Rate
People selected through skill based hiring tend to be more engaged and satisfied in the workplace as they get to utilise their strengths in the job everyday. A Gallup study shows that their skills and talent not being a good fit for the work responsibilities is one of the top reasons employees leave a job. Skills based hiring solves this problem and can support higher retention rates. - 5. More Accurate Assessments
In the traditional hiring process, the information shared in the CV or during the interview is mostly taken at their word. This creates an opportunity for dishonest candidates to lie or exaggerate and project themselves as the ideal fit ‘on-paper’. Skills based hiring limits such occurrences and ensures that the candidates are proven to be fit for the job. - 6. Strengthens Diversity and Inclusivity
Traditional hiring can be unintentionally biased. When experience-based hiring is used, people from prestigious universities or certain demographics, with good networking, and who can afford to do unpaid work for experience, tend to perform better. In skills based hiring, such advantages play no role, and everyone gets the same opportunity regardless of their background. - 7. Perfect for Rapidly Evolving Industries
For industries like technology that are evolving rapidly or focus areas such as AI, finding candidates with prior experience in a recently developed technology will not be possible. Here, employers need to hire based on the mindset and the transferable skills, making skills based hiring the perfect match.
How to Approach Skills Based Hiring
Skills based hiring may seem effortless in theory, but practising it can be difficult without proper planning. Here we share the best practices from our experience on how to approach skills based hiring.
- 1. Get Buy-In From Your Senior Leadership
Implementing skills based hiring requires a cultural shift for the organisation. Without a total buy-in from the leadership team, the transition cannot be smooth. Propose the benefits of skills based hiring to leadership, showcasing examples of how it can improve ROI and quality of hire. Show them how it resolves talent gaps and fuels long term success. - 2. Perform a ‘Skills Audit’ Across Your Organisation
To transition to skills based hiring, having a good understanding of the current skill sets and skill gaps in the organisation is necessary. Factor in hard skills, soft skills, and cognitive skills, and identify the skills to recruit for. These form the foundation of your skills based hiring process. - 3. Implement the Right Skills Assessments
Once a clear understanding of the required skills is in hand, the next step is to identify the effective methods to measure these skills. The assessment type can vary based on these different skills. They can be written tests, practical exercises or behavioural and technical interviews. - 4. Rewrite Your Job Descriptions
Review your job descriptions to remove phrases like “5+ years of experience” or “X degree”. Instead, highlight the desired skills like “experience managing employee lifecycle and performance reviews”. Focus on the outcomes of the role and use inclusive language to encourage diverse candidates. - 5. Restructure Your Interviews
Interviews are an important part of the skills based hiring process. But they must be restructured to change the focus from experience to skills. Rather than asking questions based on past experience, focus on present- or future-oriented scenarios and questions on core skills.
It is recommended for employers to move from unstructured or conversational interviews to structured interviews, as that will help to analyse the results consistently for all the candidates. - 6. Change Your Application Process
CVs, resumes, or application forms don’t necessarily give a good overview of the candidates’ skills. To gain more insights into a candidate’s personality, video applications are a great way to go. Companies like Emirates NBD, Philips, and Coca-Cola integrate videos extensively in their hiring process. - 7. Invest in Your Upskilling
Skills based hiring doesn't end at recruitment. Upskilling and reskilling the existing workforce on required skills is also an important aspect of skills-based assessment. Having an agile approach to skills development within the organisation improves skill acquisition, employee satisfaction and retention. - 8. Evaluate and Improve Your Process Over Time
Skills based hiring requires a rigorous review and validation process to evaluate the efficacy of hiring and make improvements. One way to do this is to use individual assessments to validate employees and correlate the results with performance review data. This will ensure that these assessments measure the skills required for the role, and that those skills are important to performance in that role.
The approach may sound extensive, but the trick is to start small. Rather than dismantling existing systems, embrace skills based practices through simple changes like adding critical skills to job postings or introducing skills based interviews to the hiring process.
The Future of Skills Based Hiring
As relying on experience or education becomes increasingly more unpredictable in the coming years, we will see more employers shifting to skills based hiring organically. In the face of transformational change caused by AI, employers will recognise skills based hiring as the solution to their recruitment challenges.
An IBM report says that technical skills have a “half-life” of about 2.5 years. Continuous reskilling of existing employees and adopting a skills based hiring for new employees would be unavoidable for businesses to move forward. If you want more guidance on how to approach skills based hiring and workforce planning, get in touch with our experts.
