What Is Skills-Based Hiring And Why Is It On The Rise?

As workplace culture continues to evolve in the post-pandemic world, so have recruitment processes. Skills-based hiring is a popular recruitment method, where organisations assess candidates based on their skills, over their education, experience and time in the industry. Its popularity is rising as businesses tackle acute skills gaps whilst promoting inclusivity and diversity amongst their team members.

Skills-based hiring allows businesses to focus on securing the most skilled talent. Skills-based hiring has a lot of advantages for businesses that use it, particularly in highly skilled and specialised industries such as tech, sales, engineering, and manufacturing.

What is skills-based hiring?

Skills-based hiring is a recruitment method that focuses on assessing and interviewing candidates based on their skills, instead of education and work history. Traditionally, companies would assess the level of education alongside a set number of years of experience to categorise and rank candidates. However, businesses are moving away from this method, preferring to use skills assessments, competency-based questioning and portfolio evidence to ascertain whether a candidate is suitable.

This is not the case for every industry and business. Some sectors, such as education and healthcare, require certain qualifications for safety, compliancy, and security purposes. However, there are many job roles and sectors where skills can be the commanding factor in a hiring decision.

Why is skills-based hiring on the rise?

Skills-based hiring is gaining traction because of its many advantages for businesses. According to TestGorilla, 94% of employers who use skills-based hiring agree that the method is a better predictor of success in employment than traditional hiring. The advantages of skills-based hiring are causing the method to increase in popularity amongst industry leaders as they see the results it can bring.

• Increased talent pool

For the past few years, many organisations have faced extensive skills disruptions. In fact, a recent survey found that 70% of leaders believe there is a skills gap in the labour market, and over 1 in 3 report experiencing limited innovation and growth as a result of their skills gap. This makes working on attracting suitable candidates all that much more important. By focusing on what skills are required for the role, a business is more likely to receive more relevant candidates for the job and make a good final hiring choice

Removing strict markers, such as degree qualifications and years of experience in a job specification, and instead placing focus on skills and projects that the company is looking for will help to widen the business’ pool of talent, making it easier to attract talent. Focusing on degree qualifications and industry experience can make candidates feel underqualified and discourage them from applying.

• Improve diversity

Organisations are starting to realise how strategically important diversity and inclusion are to their operations. A recent study found that, on average, inclusive and diverse teams made better decisions up to 87% of the time compared to non-inclusive teams.

Making recruitment processes fairer is key to organisations having naturally diverse teams. Skills-based hiring can help to improve the recruitment process by basing hiring decisions on skills rather than personalities and cultural fit.

In certain industries, such as technology or engineering, there are so many opportunities to gain skills outside of traditional education routes, such as online courses, part-time qualifications, apprenticeships, etc. This can make traditional methods of recruitment less important in these industries and skills-based hiring increasingly common.

• Limit chances of a bad hire

The true cost of a bad hire for a business can be up to 3x an employee’s annual salary in some sectors. Between figuring out how to deal with a bad hire – whether to train them, replace them, or put them through disciplinary measures, can result in significant costs to a business, notwithstanding the cost of operational delays and potential reputational damage.

Skills-based hiring can improve an organisation’s chances of successful hiring. This is because advanced skills assessments will help hiring managers identify who has the right skills they need for the role. After all, just because someone has a particular degree or a certain number of years of experience in a sector, does not always mean they will be a better fit than someone newer to the sector who might have entered via a training programme or an apprenticeship. This will mean that the person who has the best skillset will be offered the job and will likely be more successful in the job.

• Accelerated time to hire

The time it takes for a business to go through the recruitment process and successfully hire someone is crucial. Great, skilled professionals are often hired quickly by other businesses, so to stay competitive, companies need to act fast. This is where skills-based hiring can be particularly useful. By focusing on competencies and using skills assessments, a business can rank candidates quickly and identify the front runners.

How can businesses implement skills-based hiring?

For businesses that want to take part in the growing skills-based hiring movement, but have no experience of it, knowing how to approach it can seem like a big task.

Get the right processes in place beforehand…

• Understand the hard and soft skills required

Firstly, when utilising a skills-based hiring approach, one of the most important steps is identifying the exact soft and hard skills necessary for the role. Businesses should understand exactly what they are looking for in candidates. Skills can be either hard (knowledge) or soft (behavioural and interpersonal). Understanding which are critical and which are nice-to-have will make assessing candidates easier.

• Update job descriptions

If it is the first time a business is conducting a skills-based hiring process, it is important they review job descriptions and remove references to years of experience and qualifications required. Once they know exactly what skills they are looking for, they can create a section focusing on the skills that they require. This will help to attract the right sort of candidates to the role.

• Consider accepting application forms

Using application forms instead of CVs can help in focusing the search solely on skills. Application forms can include questions that encourage the candidate to demonstrate how they can meet a certain skill requirement. Traditional CVs can focus more on detailing experiences and may not clearly reveal a candidate’s skillset.

Continue the skills-based focus during the hiring process…

• Use skills assessments

Skills assessments are one of the best ways to assess skills during a recruitment process. This can include practical skills tests and psychometric assessments that focus on interpersonal skills. These assessments will help to form key hiring decisions and identify which candidates have the right skills for the role.  It is important to place weight on these assessments when evaluating candidates in a skills-based hiring process.

• Structure interviews around competency questions

Interviews in a skills-based hiring process should also focus on skills and competencies. Combined with skills assessments, competency-based questions can efficiently assess whether a candidate is a good fit or not. By focusing on evaluating competencies and skills, it will reduce the chances of organisations hiring people for any other reason than their ability and selecting the right person for the role.

There are many different methods to hiring, but skills-based hiring could be key to helping you secure the right professional for your next vacancy. If you need help in effectively recruiting a new IT professional, please get in touch with our team here.