Skills-Based Hiring in 2023: Why Does it Matter?
A growing number of companies are focusing on skills-based hiring to stay competitive in today’s changing job market. They’re looking beyond the past experiences and educational qualifications of a candidate. Skill-based hiring is an approach that prioritizes candidates’ skills and performance rather than their past qualifications. According to Testgorilla’s The State of Skills-Based Hiring 2022 report, over 76% of employers use this technique to discover the best talent.
In this post, we will discuss skill-based hiring in-depth, its benefits, and how you can implement it in your organization
What is Skills-Based Hiring?
Skills-based hiring is the practice of choosing candidates based on their abilities and job competencies. This approach basically aims at assessing skills required for the job including technical, cognitive, and physical skills. Companies look for those candidates who can adapt themselves to the job role rather than the ones who have several degrees and qualifications in their resumes. From screening resumes to video interviewing candidates, hiring managers put all their effort into achieving one goal – hiring the right candidate for the job. If they are lucky, they will find a star candidate who is an ideal fit for the role. The same report from Testgorilla reveals that 72.1% of the surveyed employees who were hired using a skills-first hiring approach were happy with their current job – increasing job satisfaction and retention. It’s high time for organizations to incorporate this approach into their recruitment methodology.
Skills-based Hiring vs Degree-based Hiring
In a typical degree-based hiring process, recruiters generally look for role keywords and educational qualifications on the applicants’ resumes to check if they are suitable for the role. In short, this tactic only uses applicants’ degrees and education to ensure they are the right fit for the position.
However, this approach isn’t completely reliable as it can be misleading due to many reasons. A lot of candidates tend to lie on their resumes to increase their chances of getting a job. A degree alone can’t determine whether a candidate will perform well in a job because it doesn’t indicate their capabilities. There are candidates who are constantly learning new skills on their own but may not have multiple degrees required for a particular job. Consequently, they don’t get a chance, and as a result, companies miss out on many competent employees.
Additionally, relying on skills as a measurable metric allows for a more data-driven evaluation, reducing potential biases and promoting fair hiring practices. By embracing skills-based decision-making, recruiters can enhance the overall quality of their hiring process and contribute to building a strong and competent workforce.
Why is Skills-based Hiring Becoming Increasingly Popular?
Wondering how skill-based recruitment can be a game-changer for your organization? Let’s understand some of its benefits:
1. Better Quality of Candidates
Bad hires are costly to companies. The financial impact of a bad hire can be quite significant, averaging around $15,000 for an employee with an annual income of $5000. The average cost of losing a valuable hire jumps to nearly $30,000. Degrees and past experience are not enough to help recruiters find the best match, but skills are. Organizations that integrate skills-based hiring often make better quality hires as compared to those that don’t.
2. Saves Time and Money
In a survey by CareerBuilder, 74% of employers revealed that they have hired the wrong person for the job. When hiring criteria prioritizes skills over other aspects, it increases the chances of getting the right candidate for the role who can excel in their role and contribute better to the organization. A wrong hiring decision can lead to unnecessary costs and waste time for both recruiters and hiring managers. The company will have to put all its time, money, and effort all over again to find a replacement. If employers choose an employee for a role where they can contribute significantly, it will lead to better job satisfaction and company outcomes.
3. Improves Employee Retention Rate
Recruiting someone whose skills match the job requirements increases the chances of them being competent at their work. When employees feel competent in their roles, they develop a sense of loyalty and dedication to the organization. It ultimately reduces turnover and fosters long-term retention. Skills-based hiring not only ensures a better selection of candidates but also creates an environment that helps them build long-lasting relationships.
4. Reduces Bias in Hiring
Skills-based hiring reduces hiring biases by shifting the focus from demographic characteristics to a person’s abilities. With a focus on candidates’ skills and expertise, companies can now make fairer evaluations and decisions. The unconscious biases in traditional hiring practices such as age, color, or gender, may directly or indirectly impact hiring decisions. It can unfairly prevent highly skilled and qualified individuals from getting the opportunities they deserve. This smart recruitment approach enables organizations to open up opportunities for people from diverse backgrounds and hence leads to fairness in the hiring process.
How to Implement Skills-based Hiring?
Implementing skills-based hiring involves defining required skills, creating skill profiles, assessing candidates’ skills objectively, and providing opportunities for skill development and growth. This approach enables organizations to build teams with the right skills to drive innovation, productivity, and success in an ever-evolving job market.
1. Update Job Descriptions
Start with the job descriptions. Re-evaluate and rewrite the requirements that new hires will need for the job role. Companies get more responses when they focus more on the relevant skills and responsibilities. Data from LinkedIn has revealed that job posts that highlight ‘responsibilities’ instead of ‘requirements’ receive 14% more applications.
2. Screen Candidates Inclusively
As discussed earlier, there are times when unconscious biases influence decision-making. In addition to shortlisting candidates based on their experience in a well-reputed company, organizations should also consider highly-skilled candidates from less-known organizations. With the job role in mind, candidates can be matched accordingly. The screening process becomes more inclusive when companies prioritize skills over anything else.
3. Create a Structured Interview Process
Create an interview structure that you can use regularly for analyzing each and every invited applicant for the interview. Develop the structure based on the job specification, which assesses their skills and competencies. Employ video interview software so you can evaluate more candidates in less time. By asking behavioral questions in a behavior-based or competency-based interview, employers get a better idea of how someone works, what soft skills they possess, how they handle tough tasks and conversations, and how their skills fit into the role.
4. Skill-Based Assessments
Skill-based assessments play a vital role in objectively measuring candidates’ qualifications and abilities. This is an opportunity for applicants to demonstrate their skills in practice – by completing the tasks or through job simulations. For example, a software engineer could be given a coding challenge to test their programming skills, while a sales candidate could be asked to pretend to make a cold call and interact with a prospect. Skill assessments can be reviewed anonymously, which helps in avoiding bias.
5. Make Fair Job Offers
The way companies pay their employees shows how they value them. Check the compensation strategy to make sure it matches the skills the candidate is offering. Hire based on skills, not just experience or educational background. Someone great at their job without a degree might earn more than an average person with a master’s degree – who knows! Leave room in the pay range for employee growth. As employees further improve their skills, they can get paid more and have chances to progress in their careers.
In today’s changing job market, skill-based hiring is crucial for companies to remain competitive. Instead of focusing solely on degrees and past experiences, this approach gives priority to candidates’ skills and performance. By doing so, organizations can attract top talent, save time and resources, and retain employees in addition to creating a fairer hiring process. Skill-based hiring helps companies build a strong and flexible workforce that drives innovation and achieves long-term success.