All You Need to Know about Skills-based Hiring

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Every day companies are leaning more and more into finding new ways to optimize their recruitment budgets and efforts. Skills-based hiring is becoming a rising trend for companies to attract the most qualified talent in record time. 

The main idea behind this talent acquisition strategy is to find candidates with the necessary qualifications for a certain job role despite their background or education. Skills-based hiring has proven to be highly effective in that 88% of hiring managers prefer to find candidates with the fundamental skills for a job and invest in training them on the job. 

What is skills-based hiring?

Skills-based hiring is a talent acquisition approach that focuses on the candidate’s specific competencies for the role. Contrary to traditional role-based hiring, which centers on education, credentials, and background, skills-based hiring favors testing the applicant’s abilities, allowing employers to gather real data about the candidate’s skills over their resume. 

The main idea behind skills-based hiring is to evaluate a candidate’s actual capabilities for the role, even if they don’t have a degree or background related to the position. According to TestGorilla, 76% of employers have shifted to skill-based hiring as it brings better results when hiring for skills over education. 

On top of that, of those companies that shifted to skills-based hiring, 92% reported this method makes it easier to identify quality talent, and 89% stated it also makes it more predictive of a candidate’s on-the-job success. 

Usually, hiring managers will ask job seekers to perform skills-based tests; these can go from an assignment to asking for a work sample or a portfolio. The idea behind these tests is to collect evidence about the candidate’s skill set that gives more arguments to make a hiring decision based on actual capabilities than a resume, unconscious bias, or work background. 

Skills or degrees in the hiring process 

Examining a company’s priorities during the recruitment process is essential to understanding why many of them are shifting to skills-based hiring. Even though there were times when resume-based hiring was effective because of all the knowledge a degree could guarantee, with the arrival of video learning and other types of education, employers realized they were screening out talent pools without degrees. 

Skills-based hiring also reflects one of the top 2024 hiring trends: using data-driven recruitment to make more informed staffing decisions. Skills-based tests and interviews prioritize measuring a candidate’s abilities over education or experiences. 

This represents both a benefit for job seekers and hiring managers. Candidates with unconventional career paths for the job position they’re applying for have a fair chance of being hired, while employers increase their chances of attracting and retaining top talent despite their degree. 

Of course, one aspect does not exempt the other. Some candidates most likely have the degree for a role and the hard and soft skills to be proficient at work. One of the fundamentals behind skills-based hiring is to get talent to close the skills gap; truth be told, this can come in different shapes. 

Qualifications and credentials are the focal point of the skills-based approach, but they don’t overshadow degrees, certifications, or other aspects of a candidate’s profile. 

Benefits of skills-based hiring 

With a better understanding of skills-based hiring, it’s time to dive into its benefits for both employers and job seekers. On the company’s side, here are some of the most tangible benefits a skill-based hiring approach can offer:

• More effective hires: Considering the cost of a new hire can be high for some employers, skills-based hiring allows managers to find the most adequate match for a role. It also reduces candidates’ second thoughts and regrets, as they’re more assured of their qualifications for the position.
• More streamlined hiring process: Besides finding quality candidates, approximately 82% of employers who adopted skills-based hiring have also made their hiring processes more straightforward and efficient. By sending skill-based tests before the interview phase, companies have improved their time-to-hire—the period from a candidate applying for a role to accepting a job offer.
• Boost retention: Even if employers prefer to take their time to feel more secure about a long-lasting match, companies that lean on skills-based hiring will improve their retention rate as they express their interest to both applicants and employees about their workforce growth and success. 
• Improved workplace diversity: Skills-based hiring also contributes to DEI initiatives as candidates have gained access to job opportunities regardless of their background. This aspect ultimately leads to building a diverse workforce and all its benefits, such as boosted productivity, increased team morale, etc.

Among equal chances of getting hired, here are some benefits of skills-based hiring from candidates’ and employees’ standpoints.

• Flexible career development: Skills-based hiring has changed employees’ linear approach to developing their careers. While before, career growth depended on hierarchies and available roles suitable to one’s profile, with the skill-based approach, workers can more freely plan the skills they want to acquire and their career path.
• More accessible career change: A pivotal aspect of skills-based hiring for job seekers is their transferable skills, especially for those seeking a career shift. As companies using the skill-based approach are more focused on the skills they need for their open roles and organizational goals, they’re more likely to hire candidates with the skill set or who are investing in developing it regardless of their background. 

How can companies get started with skills-based hiring?

While many hiring managers may still need to be convinced to adopt the skills-based hiring approach for their companies despite its advantages, getting started with some best practices is the most efficient way to convince yourself and experience the benefits first-hand. Find below some actions employers can take to get started with skills-based hiring. 

Define your job openings based on skills rather than hierarchies  

The first recommended action to get started with skills-based hiring is to change your recruitment strategies. Instead of creating a new job role based on a worker who just left the company or hierarchies, evaluate the skills you’ll need for your upcoming plans or goals. 

Get insight from managers and coworkers to define the tasks, hard and soft skills, and other aspects of the role. By crafting specific potential employees’ profiles based on skills, you’ll inevitably orient your hiring process toward skills rather than resumes and increase your chances of finding a better match for the role. 

Optimize your job postings

Another must for skills-based hiring is to optimize your job postings to attract the most qualified candidates based on their skill set. Evaluate both your job descriptions and job specifications and make sure to keep them concise and stand out the following items over degrees or work experience: 

• Responsibilities over requirements
• Essential skills for the role
• Necessary qualifications or credentials
• A note that your company has a skills-based hiring process

Test skills before the interview process

Talent assessments, skill-based tests, and take-home assignments are your biggest allies in skills-based hiring processes. They allow you to get a solid score or date on a candidate’s competencies. Define the crucial skills for the role, find the proper assessment to test them, make it automated, and send it to all your applicants. 

The recommended timeframe for applying skills-based tests is before the interview process. If you add the testing at the top of the hiring funnel, you’ll increase your chances of having a faster process free of unconscious bias instead of sailing through resumes for the right candidate. 

Find a balance between culture fit and culture add

Although cultural fits gained force after the COVID-19 pandemic as a method to guarantee long-lasting matches, many specialists have stated this concept should evolve to “culture add” in order to balance what candidates can bring to the table over how they can adapt to the company. 

The approach shift regarding cultural adaptability reflects one of the main skills-based hiring principles, which focuses on how a candidate’s skill set, personality, and certifications can help upskill other employees rather than how their resume will fit into the existing culture. With skill-based hiring, every new employee represents an opportunity for the company to upgrade the workplace. 

Extend your efforts over the hiring process

As with any other hiring process, you should be aware and take care of the actions for applicants who don’t get selected as well as the onboarding process for the ones who got hired. Candidate rejection is a sensitive topic nowadays, and constructive feedback practices are vital to avoid negative reviews that will ultimately affect your employer branding.

Regarding the actions after hiring a candidate, personalized onboarding, learning opportunities, and adapting performance reviews to assess qualifications are a few of the actions that will let you experience the long-term benefits of shifting to skills-based hiring. 

Partnering with a recruiter for skills-based hiring

Working with a recruiter is an excellent way to get a fresh set of eyes for reevaluating and improving your hiring process and recruitment strategies. As talent search specialists, they can provide insight into your industry’s latest trends and the skills for the future of workers from your sector. 

When it comes to skills-based hiring, recruiters can fulfill different functions throughout your funnel. First, they work as a filter, getting to know the candidates’ profiles and qualifications before referring them to hiring managers. Recruiters are experts in matching the dots, so once they fully understand your needs and goals, they’ll optimize your talent search in all aspects.

In other phases of the hiring process, recruiters can also assist you in reshaping your job descriptions to make them skills-oriented; on top of that, they can broaden your talent pool and get your posting to a bigger audience. So if you’re interested in adopting skills-based hiring, partnering with a recruiter is a short-term solution for doing so. 

If you’re looking to excel in your recruitment strategy or find your way into new talent pools that allow you to take your projects to new levels, you must shake things up. Skills-based hiring allows companies to find new markets, try new screening methods and interview processes, and modernize their recruitment practices to upgrade their workforce.

Contributed by Luis Arellano