Spare a thought and read this story, especially if you are a hiring manager. 

Not so long ago, two candidates applied for a tech role at ABC Inc. Candidate A was a terrific fit for the role, with skills matching all aspects of the job but had not worked at well-known companies. Candidate B wasn’t the best fit, but worked at large global enterprises and went to an IV league school.

Guess who got hired?

Candidate B!

This is one frustrating and common example of how traditional (antiquated?) hiring favors credentials over competency. Most interviews follow this process, eliminating better fit and more competent candidates because they don’t have the desired pedigree.

To become competitive, many companies have adopted a skills-based hiring strategy with data showing better culture and performance, yet the majority continue to follow a traditional hiring process.

Why Companies are Shifting towards Skills-Based Hiring Practices?

Before we answer, let’s take a quick look at what skill-based hiring is.

“Skills-based hiring emphasizes practical, working knowledge for employees; it prioritizes what an applicant can do, rather than the education they already have. Instead of asking an applicant to list their years of experience and degree, you look for capabilities, such as reaching an expert level in Excel.” – HR Certification Institute

Gone are the days, when ‘degree inflation’ was a trend. More and more employers make their hiring decisions on candidates’ skills and abilities.

Ask Patrik Wilkens, VP of TheSoul Publishing about the trend, he says, “I want to know: does the candidate fit our culture? Can we help the candidate to grow? Can they help the company? That’s my main focus for hiring.”

According to Emsi Burning Glass report titled, ‘The Emerging Degree Reset’, there’s a sharp decline in employers asking for degrees and diplomas in job postings between 2017 and 2020.

In short, skill-based hiring is more than just hiring. The avant-garde approach spotlights a candidate’s skills and competencies instead of academic qualifications and work experience only. So, if you are looking for a candidate regardless of their work history, college degrees, or any other bias, then you are into skill-based hiring.

How do you define ‘Skill’ exactly?

Skill requires a revaluation. The new definition of skill is the ability or competency that can be applied to multi domains and not limited by a job description, job function, or formal credentials as the school attended. These skills can be soft or hard skills and even technical like coding or data analytics.

Further, skill and level of competency for that skill aren’t limited to academic qualification or company experience. Today, skill can be acquired from multiple places and the pace at which new technologies evolve often make traditional hiring, based on credentials, obsolete.  

What do the Stats say about Skills-based Hiring?

• Over the last 20 years, the share of highly skilled jobs has increased by 25% – OECD
• More than 90% of hiring managers are inclined toward skills than a candidate’s degrees or experience while hiring – LinkedIn
• 72% of the respondents from the hiring industry want to focus on a candidate’s skills and competencies – Deloitte
• 64% of employers agree that skill tests accelerate the candidate screening process – Toggl
• Employees without degrees tend to remain with their jobs 34% more than others with degrees- McKinsey
• 77% of the organizations think it is their job to support employees to upskill and reskill – Deloitte Insights
• Candidate sourcing is 60% easier when it is based on skills – fastcompany
• 71% to 90% of organizations agree that skill transformations positively impact business outcomes – weforum
• By 2028, the US manufacturing industry could have 2.4 million unfilled positions due to a skill gap – AIHR
• 65% of companies find skills shortage is one of the prime reasons for inefficiency – KPMG

So How do You Hire Based on Skill?

What’s now critical to a skills-based hiring strategy is a way to confirm the competency, fit, interest, and integrity of a candidate. Proper evaluation of candidates, requires skill assessments: 

• Technical skill tests
• Psychometric tests
• Coding simulations
• Job-based skill tests

Related read: Online coding tests for building an effective team

AI-based recruitment software companies like Glider AI  have a skill-based test library that helps recruiters look for candidates who have the best basic and transferable skills that can be applied in their roles and problematic situations.

Advantages of Skill-Based Hiring Over Traditional Hiring

Skill-based hiring was a long overdue epiphany. When you integrate skill evaluations in candidate assessments, you get a 360 degree of a candidate’s abilities, talents, and competencies that are veiled in a resume or a job description too.

For example, there are full-stack developers hired by tech companies who do not possess a four-year college degree. 

Take a look at how the skill-focused approach is better than a linear traditional approach:

• An opportunity to look beyond the resume
• Minimize the risk of selecting a wrong candidate 
• Align skills with what the role needs
• Provide new career opportunities for employees
• Build a diverse talent pipeline
• Reduced time-to-hire
• Reduced cost-to-hire
• Higher employee retention

Bottom Line

Skills-based hiring doesn’t eliminate the traditional hiring process. Instead, it is a powerful add-on strategy to hire competent candidates in an ever-changing skill landscape. Recruiters can act as career coaches to determine the right skills for the right job roles and vet a competent workforce for the future. 

Make sure your RSVP for the ‘Getting Started with Skills-based Hiring’ Q&A for insights on how to transform your hiring to a skills-led approach. 

Happy Hiring!