An employer’s guide to competency-based hiring
Explore what competency-based recruitment is, the benefits it offers, and uncover practical steps for implementing a skills-focused hiring process.
As skills shortages continue to hinder employers across the UK and technology like artificial intelligence transforms the way we work, the need to find the right talent has never been more pressing. In fact, over a quarter of employers see finding people with the right skills as their top priority.
With traditional recruitment methods falling short, our research found that 85% of employers are now using competency-based hiring methods. With data from McKinsey showing that when it comes to overall job performance, hiring for skills is five times better than hiring for education, and twice as effective than hiring for previous work experience, it’s not hard to see why.
In this article, we take a deep dive into competency-based hiring, exploring what it means, how it can benefit employers, and providing practical steps to implement a competency-based approach to hiring.
What is competency-based hiring?
Competency-based hiring is a recruitment strategy that prioritises a candidate’s specific skills, or competencies, over their qualifications and previous experience.
This sees skills clearly outlined in the job description, used in candidate screening, and integrated into the interview process, and ensures candidates are evaluated based on their ability to perform the tasks essential for the role.
This approach can also help to foster a diverse and inclusive workforce by focusing on demonstrated skills and abilities, as opposed to subjective opinions, personality traits or traditional experience markers.
The benefits of competency-based hiring
According to Totaljobs research, 3 in 10 employers believe that competency-based hiring shortens their time to hire, with 23% reporting that it also saves on costs.
There are various additional benefits to using competencies when interviewing and shortlisting candidates, including:
- More successful hires: Hiring with specific skills and competencies in mind means new hires are more aligned with the requirements of the role. As a result, 4 in 10 businesses that are using these methods are not only attracting a wider talent pool, but over a third believe that the quality of candidates they are interviewing has improved.
- Greater Diversity, Equity and Inclusion: Objective evaluation and the avoidance of unconscious bias are key advantages of competency-based recruitment. In light of this, 31% of employers credit competency-based recruitment for improvements in the diversity, equity, and inclusion of their teams.
- Improving employee performance and retention: With a third of new hires leaving within the first six months, it’s crucial to match candidates’ skills with role requirements to improve retention. A structured recruitment model not only boosts performance but also increases job satisfaction. In fact, 34% of businesses report that competency-based hiring enhances employee engagement, and 22% have seen a reduction in staff turnover.
The competency-based hiring process
Let’s explore the various stages of the competency-based recruitment process.
From defining competencies to implementing structured interviews, each step is crucial in ensuring alignment between the skills of each candidate, and the requirements of the role.
Identifying core competencies
The first step is to define the skills, competencies, and abilities needed for success in the role you’re looking to fill.
You can do this by reviewing the current job description and speaking directly to the line manager or those in the role.
While the competencies may vary depending on your industry, the specifics of the role, and your company culture, you can consider common competencies such as:
- Communication
- Leadership
- Decision-making
- Problem-solving
- Management
Designing the hiring process
Once you have your competencies, you need to weave them into every stage of the selection process. Doing this from the outset will help to ensure you are selecting candidates based on their fit for the role and potential for success.
Consider:
- Rewriting your job description to emphasise the necessary skills for the role: By spotlighting key skills in your job ads, you can speak directly to talent who fit the bill. That’s why 43% of businesses are re-crafting their job ads to be more skills-focused.
- Revisiting your screening process: Over a third of employers have made changes to their screening criteria in a bid to expand their talent pool, with 40% also using skills assessments during the early stages of recruitment. By having a laser focus on the skills you need, you will be able to invite a more varied, more qualified and wider pool of candidates to interview.
- Adopting competency-based interviews: 1 in 3 businesses are training their hiring managers on how to conduct competency-based job interviews. These interviews use a structured set of questions that aim to measure a candidate’s fit for the role based on their ability to demonstrate their skills and share specific situations where they have needed to use them in a previous role.
Competency-based interviews
The interview stage is crucial for assessing candidate’s skills. By understanding the ins and outs of competency-based interviews, you can effectively evaluate candidates’ potential fit for the role.
Here are our top tips for conducting competency-based interviews:
Follow a set interview structure
To ensure fairness and objectivity, inform each candidate about the interview format beforehand and ask each of them the same set of questions during the interview.
Develop your questions
Prepare questions that ask candidates to provide specific examples related to the competencies you’ve outlined. Start your questions with “Tell,” “Explain,” or “Describe.”
For example:
- Can you tell me about a time you had to deal with a difficult customer or client?
- Can you explain how you prioritise your workload to meet tight deadlines?
- Can you describe a time when you had to make a difficult decision at work?
Conducting interviews
The ‘funnel technique’ is the best way of conducting a competency-based interview.
It involves:
- Inviting candidates to share examples of when they used a specific skill.
- Asking follow-up questions to probe for more details, such as the results of their actions.
- Clarifying anything you’re unsure of in their answers.
During the interview, many candidates will use the STAR method (Situation, Task, Action, Result) to answer competency-based questions. By asking follow-up questions that align with this method, you increase your chances of making the right decision.
For example:
- …What were the biggest challenges you faced?
- …Why did you make that decision?
- …What were the results?
Objectively score each answer
Use a consistent scoring system to ensure objective and fair assessment. A simple 1-5 scale works well, or you can use a checklist to tick off key points as candidates meet them in their responses.
Competency-based interview feedback
Providing feedback is an essential part of any hiring process, and competency-based hiring is no exception.
In the sections below, we’ll explore how and why you should offer clear and constructive competency-based interview feedback.
The importance of constructive feedback
Candidates invest significant time and effort preparing for competency-based interviews. That’s why employers should try to provide constructive feedback to as many candidates as possible, even if they are unsuccessful.
As well as being fair, effective feedback helps to:
- Maintain a healthy talent pipeline: Even if a candidate isn’t ready for the role now, offering feedback helps maintain a good relationship, improves their skills, and increases their future chances with your business.
- Build your brand reputation: Providing each candidate feedback is key to building a strong employer brand, which helps you attract top talent through positive online reviews and word of mouth.
- Protect your organisation: Candidates have the right to request feedback after interviewing for a job. Documenting feedback can pre-emptively address any requests for feedback, avoiding potential complications later.
Techniques for effective feedback
When providing feedback to candidates, ensure it aligns with the competency framework used during the interview.
Utilise the interview scoring system to offer feedback on:
- Competencies: Clearly indicate where the candidate met or fell short of the required competencies.
- Skillset: Evaluate the candidate’s strengths and weaknesses relevant to the job, without comparing them to other candidates.
- Development Areas: Provide actionable advice for improvement, such as key skills to develop or interview tips.
Remember to maintain a constructive tone, base feedback on facts and evidence, and reference specific answers given and their relevance to the role’s requirements.
Implementing competency-based hiring
Ready to get started? Here’s what you need to do to integrate competency-based hiring into your people strategy:
- Review your hiring processes: Start by assessing your job descriptions, screening methods, and interview formats. Ensure they align closely with the specific competencies required for each role.
- Training your hiring teams: Invest in training for your hiring managers and interviewers. This ensures a consistent, unbiased approach to candidate assessment and equips them with the skills needed to extract valuable insights during interviews.
- Continuous improvement: Regularly gather feedback from hiring teams and candidates. You can also analyse metrics such as staff retention rate, offer acceptance rate, and average performance reviews to see review the impact on your organisation and identify areas for improvement.
Harness the power of competency-based hiring
Competency-based hiring isn’t just a trend — it’s a faster, cheaper and more successful way to recruit the people your organisation needs to thrive.
With skills shortages not going away, research from Deloitte has found that 98% of business leaders want to move towards being a more skills-focused organisation. This means that there’s a growing call to ensure new hires are selected based on the specific competencies and skills required for a role.
With a few tweaks to your job ads, screening criteria, interview format, and decision-making process, you will not only find stand-out performers, improve the diversity of your team, and minimise hiring costs, but you will make strides in fostering long-term engagement that reduces the impact of staff turnover.