Skills-based hiring: What it is, and why it matters
Skills-based hiring is becoming more important than ever. This guide walks you through how to implement a successful skills-based hiring strategy.
One of the biggest challenges facing organisations in the UK is skills shortages. In its Skills Gap Statistics report, Oxford Learning College found two-thirds of large businesses are struggling to recruit employees with the right skills, whilst smaller organisations are also feeling the impact.
In response to these challenges, organisations are looking for innovative hiring methods that enable them to identify and hire candidates with the right skills. One such method that has been used to great effect is skills-based hiring.
That’s why in this article we’re taking a closer look at the definition of skills-based hiring, the advantages of hiring people based on skills, and how you can implement a skills-based hiring programme within your organisation.
What is skills-based hiring
Skills-based hiring is a recruitment approach that centres on evaluating candidates on their skills, competencies, and capabilities relevant to the job role, rather than relying on traditional markers such as experience or education. These conventional indicators often prove to be inadequate predictors of workplace performance, making them less effective as selection tools.
The core focus of skills-based hiring is to identify candidates who possess the precise skills necessary to excel in a position. By prioritising skills over other factors, this method ensures a closer alignment between the individual and the job requirements.
The key objectives of skills-based hiring include:
- Enhancing the quality of hires
- Streamlining the recruitment process for both employers and candidates
This approach acknowledges that skills are the most accurate predictors of performance and success in the workplace. By leveraging this insight, employers can construct robust and agile teams capable of meeting the demands of an ever-evolving landscape.
Why skills-based hiring is on the rise
Our research indicates that 29% of UK businesses expect skills shortages to be a challenge moving forward, suggesting that skills-based hiring will likely increase in prevalence across a range of industries for organisations of all shapes and sizes.
Additionally, Rand Ghayad, Chief Economist and Senior Vice President of Policy & Economics at the Association of American Railroads explained in a World Economic Forum article that a “skills-first model allows employers to not only find the best workers but also retain them during a time when it is historically difficult to do so.”
“Adopting a skills-first hiring approach can offer companies a means to fill critical skill gaps and stay competitive in a challenging labour market, as it broadens the range of candidates they consider,” he added.
Here are some other reasons skills-based hiring is gaining momentum:
- Performance focus: Organisations are increasingly prioritising performance, and demonstrable skills provide a reliable gauge of a candidate’s potential to deliver results.
- Changing dynamics: As the workplace evolves, employers are seeking candidates with adaptable skills who can thrive in ever-changing environments.
- Technological advancements: The rapid pace of technology, driven by developments like artificial intelligence, demands employees with cutting-edge skills and competencies.
- Efficiency: Employers are aiming to boost efficiency and minimise resource waste, prompting them to hire based on skills that align with streamlined processes.
- Future-proofing: Given the constant changes in business and technology, companies are focused on skills that will be crucial for future success, helping them stay resilient in the long term.
5 advantages of skills-based hiring
Skills-based recruitment is undoubtedly an important way to overcome the skills gap challenge in the UK, but there are a number of other key advantages to it. Let’s examine 5 of the most significant.
Improve quality of hire
People professionals often find that a skills-based hiring approach is a great way to improve the quality of a hire. That’s because workers will not only be more effective in a role where they have the skills and competencies required to thrive, but they will also feel like a better fit and therefore be more fulfilled.
Hiring based on traditional criteria such as education and experience alone can easily result in bringing in a candidate who does not have the required skills to be effective, and this will in turn result in problems for the organisation and the employee.
Grow talent pools
In the past many organisations have relied on more traditional talent pools, sometimes recruiting from specific universities or course cohorts. However, focusing instead on skills-based recruitment widens the talent pool to a more diverse group of candidates with different backgrounds and experiences.
Ultimately, by concentrating on the skills of potential candidates over criteria like education and prior work experience, hiring managers can extend their search and thereby leverage a significantly larger pool of otherwise untapped candidates.
Improve adaptability
New technologies, new ways of working, and new employer and employee expectations require new hiring methods to ensure your organisation can stay adaptable and agile. Skills-based hiring can be a key part of keeping adaptable as job requirements evolve.
Instead of having set criteria for new hires, skills-based hiring looks at the needs of an organisation here and now, making it possible to onboard talent with the specific skills an employer requires.
Boost retention
One of the added benefits of improving the quality of a hire through skills-based recruitment is that a happy employee who is a good fit is much more likely to stick around for the long term. With the skills gap in the UK creating competition for talent amongst, it is critical to not only hire the right people, but also to retain skilled employees.
By hiring based on skill and ensuring employees feel productive and valued, employers can look to ensure they feel more fulfilled and therefore less likely to look to move elsewhere.
Reduce bias
Another major benefit of skills-based hiring is that it leads to a reduction of bias in the recruitment process. That’s because evaluating candidates based on skills during the hiring process means focusing on objective criteria, rather than any subjective notions that stem from looking at education, or background, or other demographics.
This creates a more inclusive, equitable process, that will then be reflected within your organisation as more people are hired based solely on merit rather than bias.
How to implement skills-based hiring
Creating a skills-based hiring process within your organisation is simple enough, and often just requires some adjustments to the processes already in place. For some organisations that do things in a more traditional way, it can however take significant planning to maximise success. Here are some of the main ways to implement skills-based hiring.
Identify the skills you’re looking for
A large part of the work required for a successful skills-based hiring strategy starts with identifying the skills your organisation or the role in question needs. For example, our research has found that 73% of businesses are now more likely to prioritise a candidate with generative AI skills over one without when hiring for entry-level roles, as they anticipate the increasing importance of generative AI in the coming years. The research also found that 64% of HR professionals think generative AI skills are more important than A levels for candidate success.
While there is a clear need for specific technical skills to meet your organisation’s current and future needs, skills-based hiring isn’t only about the hard technical skills. Soft skills are growing in importance too. For a well-rounded skills-based hiring process, remember to include the soft skill sets your organisation will benefit from.
Rework candidate screening
To find the right candidates to consider for a role, you may need to do some work on your candidate screening processes. This might involve ensuring you are screening for skills and achievements that relate to the requirements of the role.
You may even consider removing any information that isn’t grounded in skills-based hiring to make sure these factors are not clouding judgment or encouraging bias to creep back in. This might include:
- Candidate names
- Addresses
- Education
- Past jobs
Utilise skills-based assessments
To successfully implement skills-based hiring, employers can look to objectively measure a candidate’s skills. The most reliable approach is to incorporate skill assessments during the hiring process.
Skill assessments provide measurable tests to gauge a candidate’s proficiency, whether in hard skills like technical knowledge or soft skills like communication and teamwork. By using tailored assessments, employers can ensure they are evaluating the specific skills required for the role, leading to better hiring decisions and a more skilled workforce.
Review the interview process
Once you’ve completed your initial screening and assessment to narrow down the set of candidates for a role, the interview process is the next step in the skills-based hiring process to examine. Using other approaches to hiring, interviews can tend to place emphasis on previous experience and things like personality and public speaking. However, to develop a true skills-based assessment process, interviews should be geared more towards skills.
Competency-based interviews can be implemented to find evidence of a candidate using the required skills in previous roles, which can be a good demonstration of their ability. However, employers might also consider asking questions about hypothetical situations or future scenarios to see how the candidate would use their skills to solve those problems.
Continually monitor progress
Following implementation, employers should consistently monitor and refine their skills-based hiring practices to ensure they’re effective and to identify areas for improvement. This can involve evaluating key metrics such as:
- Quality of hire
- Staff retention and turnover rates
- Overall employee satisfaction
To gather relevant insights, employers can analyse data on staff performance, conduct internal surveys to measure satisfaction and collect feedback from line managers about the effectiveness of the hiring process. By tracking these indicators, employers can fine-tune their skills-based hiring approach for better outcomes.