Dan Schawbel* considers an increasingly popular form of recruitment that puts less stress on a candidate’s academic qualifications and work experience.
Skills-based hiring, also known as competency-based hiring, prioritises an applicant’s skills and knowledge over their academic background or work experience.
In recent years it has gained widespread popularity among employers and is now considered a leading trend in the world of recruitment.
Recent research shows skills-based hiring is up 63 per cent in the past year as more employers value experience over academic qualifications.
Another study found that 79 per cent of employers say skills assessments are just as or more important than other hiring criteria.
The primary reason behind this tread is the changing nature of work.
With technology constantly evolving and the job market becoming increasingly competitive, employers are looking for candidates who have the necessary skills to perform the job and adapt to new challenges.
In this context, an applicant’s academic qualifications and work experience, while important, are no longer the sole determining factor in their employability.
Another reason for the popularity of skills-based hiring is the increasing demand for job-ready candidates.
Employers today want employees who can hit the ground running and make an immediate impact, and skills-based hiring provides them with that assurance.
This results in a more efficient and cost-effective recruitment process, as employers no longer have to invest time and resources in training new hires.
Skills-based hiring also allows employers to attract a wider pool of candidates, including those who may not have traditional backgrounds in their industry.
This helps to create a more diverse and inclusive workplace, where individuals from different backgrounds can bring their unique skills and perspectives to the table.
The Burning Glass Institute analysed millions of online job listings and found that the number of jobs requiring a university degree dropped from 51 per cent in 2017 to 44 per cent in 2021.
Skills-based hiring benefits organisations in the following ways.
Increasing popularity
A study by LinkedIn found that 60 per cent of global leaders believe that skills-based hiring will become the primary method of recruitment in the next five years.
Higher success rate
A survey by ManpowerGroup found that 77 per cent of employers who use skills-based hiring reported a higher success rate in finding the right candidate.
Reduced turnover
Another study by ManpowerGroup found that skills-based hiring can lead to reduced turnover rates, with 78 per cent of employers reporting a decrease in turnover.
Improved diversity
A report by Deloitte found that skills-based hiring can lead to improved diversity in the workplace, as it allows employers to consider candidates from a wider range of backgrounds and levels of education.
Better alignment with job requirements
A study by Glassdoor found that skills-based hiring can lead to better alignment between the job requirements and the skills of the candidate.
Some of the largest global companies who are now using skills-based hiring are IBM, Deloitte, Amazon and Accenture.
While there are many benefits of skills-based hiring, there are some important downsides.
Bias
Certain groups of people may be disadvantaged if the selection criteria are not fair and impartial.
For example, online assessments may favour individuals with certain backgrounds or levels of education.
Limited assessment
Skills-based hiring may only evaluate a narrow set of skills and not take into account other important factors, such as personality, attitude, or cultural fit.
Cost
Implementing skills-based hiring can be costly, as it often involves the use of specialised tools and resources, such as online assessments and simulations.
Resistance to change
Some candidates and employees may resist the adoption of skills-based hiring, as it can be perceived as a departure from traditional methods.
Lack of experience
Some employers may be hesitant to hire candidates without work experience, as they may lack the necessary context and judgment to perform effectively.
Despite the downsides, the trend toward skills-based hiring is likely to continue as employers look for the most effective and efficient way to find the right candidate.
As the job market continues to evolve, it is likely that skills-based hiring will only become more prominent in the years to come.
*Dan Schawbel is a bestselling author and Managing Partner of Workplace Intelligence, a research and advisory firm helping HR adapt to trends, drive performance and prepare for the future.
This article is part of his Workplace Intelligence Weekly series.
