Skills-based hiring is a growing trend that has the potential to revolutionize the recruitment process and put you ahead of the pack when it comes to attracting and retaining global talent.
Our 2022 State of Skills-Based Hiring report reveals that both hiring teams and candidates are increasingly dissatisfied with ineffective and unfair traditional recruitment methods.
Overemphasizing the role and reliability of resumes has led to mis-hires, low employee retention, and recruitment biases that stop talented people from being placed in roles suited to their strengths.
But hiring methods are changing. We found that 76% of companies are already embracing skills-based hiring. The best part? Candidates hired in this way are happier in their roles, stay longer, and perform better.
We know skills-based hiring increases hiring ROI while reducing time-to-hire and employee churn. But we’re no strangers to its challenges either since we practice what we preach in our own organization. That’s why we’ve put together 10 skills-based hiring best practices to apply in your business.
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Challenges of skills-based hiring
There are all kinds of barriers to trying out a new process – like finding the budget for it in the first place. The following are the biggest challenges of skills-based hiring:
Reliability of results
Some employers still doubt the quality and integrity of skills-based assessments. In other words, you don’t know how well these tests actually measure candidates’ abilities.
But our research shows that 92.7% of employers reduced costly mis-hires through skills-based hiring. Plus, we’re our own best case study – our own skills-based hiring process has offered continuous proof that this method results in happier, higher-performing employees.
It’s difficult to evaluate assessments from a big candidate pool
Most HR teams aim to attract a few high-quality candidates and choose from the best. But that’s rarely the reality. We found that up to 78% of candidates apply for jobs when they don’t meet all the requirements. That’s a lot of irrelevant profiles for you to sift through.
But Paul Abercrombie, the director of talent (EMEA) at Klaviyo, said, “[We have] certainly improved our time-to-hire; moving from a rather clunky manual system to skills-based assessments accelerated our hiring process significantly.”
Even after processing, marking, and documenting skills tests, skills-based hiring is more scalable and reduces the time spent processing applications.
You need to add another stage to the hiring process
Lengthy hiring processes can cost your company revenue, productivity, and even top-tier candidates. Among the employers we surveyed, skills-based hiring raises concerns about adding more stages to the hiring process.
The key here, though, is not to approach skills-based hiring as an additional stage but rather as a replacement for other processes, like reviewing resumes. In this way, skills-based hiring results in a more efficient, streamlined process overall.
In addition, most job applicants see skills-based hiring as a good thing. Seventy percent of the candidates we asked felt that this extra step makes them more likely to land their dream job. Plus, most of them are happy to complete extra steps if it means the hiring process is fairer and more objective.
There’s no budget for a new recruitment process
Recruitment is expensive, especially when you could instead be focusing on your main ROI-generating tasks. Therefore, you might be worried that preparing role-specific tests and evaluating each candidate will cost you more time and money.
But when you adopt skills-based hiring, you actually reduce the time spent screening applications and are more likely to find talented candidates who feel more fulfilled in the role. This means reduced employee churn and higher hiring ROI and productivity in the long run.
With these concerns in mind, we’ve put together a list of 10 skills-based hiring best practices you can apply in your organization.
10 skills-based hiring best practices to get you started
By comparison, 58% of respondents felt that skills-based assessments were more effective. Achyut Menon, the managing director at Options Executive Search, says, “Today it’s a no-brainer. You can’t get people without checking their skills.”
So, if you’re ready to make your hiring process fairer and more effective, here’s what we recommend:
1. Define the skills required for each role
Real talent doesn’t come down to whether or not someone has a college degree. Skills credentials are far more important. Take Revolut, the mobile banking app. To reach a global user base, it needed multilingual support staff.
Julia Panchenko, the services recruitment manager at Revolut, says the company was facing major challenges with all the “extra manual work” required to manage written and verbal language checks.
Since she knew language skills were fundamental to the role, it made sense to create an automated screening process based on language proficiency. This helped her improve time-to-hire by 30% to 40%.
To define the important skills for your vacancy:
- Start by speaking to the hiring manager. They’ll be able to list the practical skills used in the role. Make sure the list is specific enough, e.g., “using content tools like Sprout to schedule social media posts” rather than “marketing.”
- Practice “skills ontology.” This refers to understanding the skills a candidate needs for a specific role and measuring the relationships between those skills. This lets you create a common language and understanding of the skills you need across various roles.
- Think about soft skills. Hard skills are practical requirements like “using Node.js to develop software.” Soft skills are personal attributes like the “ability to solve problems under time pressure.”
- Categorize skills as “required” or “acquired.” Certain skills are needed before the job starts (required), but others can be learned later (acquired). Separating the two will help you make better hiring decisions.
- Add transferable skills. Otherwise, you could miss a talented person whose resume doesn’t show a typical career trajectory. For example, a former high school teacher could have the public speaking and organizational skills to suit a role in events management.
- Ask, “How will they prove it?” All the required skills for a role should be measurable. Certification isn’t always the best proof of skill, so consider how a skills-based test or assessment might help you screen candidates.
2. Write better job descriptions
We like to think that education is a meritocracy, but the truth is it’s just as prone to bias as hiring can be. If your job descriptions state that applicants need a certain level of education, you’ll shut out a wide pool of talent simply because they don’t have the privilege of having a college degree.
Fewer employers are making this mistake than ever before. In 2020, the number of job ads on LinkedIn that didn’t require a degree increased by nearly 40%.
To modernize your hiring process and create a more diverse workforce, write a job description template that focuses on the ideal candidate’s skills and values.
- Focus on responsibilities over requirements. This is the secret to attracting a wide talent pool. Job descriptions that describe the tasks an employee will face on a regular basis are likely to get more applications per view.
- List any other important skills. Again, don’t forget soft skills like empathy or teamwork. This will help candidates understand what’s expected of them.
- Add the necessary qualifications. Skip this step if degrees, certifications, or licenses aren’t a hard requirement. Otherwise, you could add a note about any required work samples or skills assessments here.
- Show them why they should apply. Think about what makes this role appealing, what learning and career development opportunities there are, and what elements of your company culture to display.
- Do a final edit. Snappy job descriptions are the way to go since most applicants won’t spend more than a few seconds skimming through them. Cut any language that might discourage women or minorities from applying – better yet, get a second opinion from your diversity and inclusion officer.
3. Screen candidates using skills-based assessments
When it comes to skills-based hiring, your biggest ally is a skills test or assessment. Whether you choose a technical skills assessment or behavioral test, the idea is to get an objective score to accurately reflect competency and reduce hiring bias.
For example, TruTrip, a business travel management company, found that new hires’ skills weren’t meeting the organization’s needs. They had frequent mis-hires who struggled to collaborate while working from home or didn’t have the English language skills to contribute to discussions at work.
TruTrip swapped a resume-focused screening process with pre-employment assessments, which helped them shortlist candidates who were a much better fit. Hugh Batley, the founder of TruTrip, said, “[New hires] become great contributors more quickly and, importantly, they appear to have a better initial experience with us.”
Pro tip: Before you overhaul your entire hiring process, pick a vacancy that needs your attention urgently. For example, start with a role that has a high turnover rate and could do with a boost in employee retention. Then, look for a skills test that suits the role.
4. Test skills early in the hiring process
Introducing your skills test early (at least before the interview stage) will help you make fast, bias-free decisions and create a shortlist of suitable talent rather than wading through resumes.
Paul Musters, the founder and chief executive of Emaho, says, “One of the reasons skills-based hiring helps is because you don’t have to overthink how to make a hiring decision because you have a framework in place. It saves you time and, even more importantly, it saves you headspace. A gut feeling can play a role, but your gut feeling is trained better with these tools.”
To bring skills-based testing in early:
- Shortlist the most crucial skills. There may be some skills that are essential to the role. These are the ones to test for right at the beginning of your application process. For example, if using the React Native framework is a core responsibility, you could screen all applicants using a React Native test before you even look at a resume.
- Pick a relevant assessment. You could build your own or choose from a library of pre-built tests. You can also mix and match tests from different categories, like language proficiency, soft skills, and personality tests.
- Create an automated process. If the first step of the process is to screen applicants based on a test, use your applicant tracking system (ATS) to trigger an automated email to the hiring manager that includes the test results of the best-scoring candidates.
5. Give candidates a take-home assignment
Similar to a skills-based assessment, a take-home assignment is an opportunity for candidates to show how they approach a specific task in a more realistic scenario. We found this is the second most popular type of skills-based hiring after role-specific tests.
For example, if you’re hiring a graphic designer, you could give them a creative brief for an ad campaign. Give the designer one week to complete the task using your company’s typical software and processes.
When the task is complete, they’ll present the campaign while you ask questions to evaluate their creativity, attention to detail, and ability to follow processes.
The benefit of take-home assessments is that you can evaluate the approach as well as the results and skills used, so even less experienced candidates may get an opportunity to shine if they’re a great match for the role.
6. Advertise to a wide audience
Before Digital Care started using skills testing, job openings were only ever advertised via the chief executive officer’s LinkedIn profile. Social media is a handy tool for sharing job ads, but it doesn’t get you much further than a few immediate connections.
Now, Digital Care posts on career websites and uses skills assessments to screen applications. So, even though far more applications come in, the hiring team actually saves time (and money) by only focusing on the best candidates.
Advertise on a mix of social media channels and job sites to reach the widest possible audience. When the applications roll in, use your ATS to organize applicants, easily search by key terms or application status, and automate stages of the hiring process.
7. Look for “culture add,” not “culture fit”
It’s trendy right now for companies to rave about their internal culture. That’s understandable: Disengaged employees can cause internal conflict and reduce overall productivity.
But hiring someone you think will “fit in” is problematic. Firstly, recruiters often get organizational culture or values confused with whether or not the candidate would be “up for beers” after work. Secondly, it reinforces existing biases and reduces someone’s ability to do a job to whether or not they share the same hobbies or interests as their team.
Hiring for “culture add” over “culture fit” focuses on what the candidates can bring to the table rather than how they fit into the existing culture.
You’ll see organizations like Netflix and Zoom embodying this idea. Netflix’s famous company culture includes values like “judgment, communication, curiosity, innovation, inclusion, integrity, impact, and passion.”
Meanwhile, Eric Yuan, the chief executive officer of Zoom Video Communications, has said that he looks for hires with diverse experiences who can bring new ideas and fresh thinking to each team.
Here’s how you can do the same;
- Define the values of your organization. What makes your business tick? How do you differentiate yourself? It’s important for all employees to understand your company’s values so that they can fulfill the expectations of their role.
- Don’t confuse values with ideas. Candidates need to share the values of the organization, such as being low ego or solutions-oriented. But that doesn’t mean that they can’t have different ideas or backgrounds.
- Be inclusive. Hiring for “culture add” means looking past whether someone has a specific degree or goes skiing every February. Instead, look for anyone who shares the company values, even if they have their own perspectives. This kind of diversity will result in a more dynamic, creative workforce.
- Compare candidates objectively. You need a bias-free way to compare candidates without discriminating. Many businesses have started using assessments like culture-add tests to make more quantifiable comparisons.
8. Encourage skills-focused interviews
Before you begin interviewing, build a scoring rubric that clearly defines what constitutes a good answer to each question. This will help reduce subjective judgments and give your interviewers robust guidance for skills-focused interviews.
Make sure to design your interview questions to reveal the skills you’re looking for. For example, situational questions (like “Tell me about a time you’ve disagreed with an important client. How did you handle it?”) help evaluate the candidate’s values and behaviors in certain scenarios.
Dropping in some unexpected questions will also show you how a candidate processes information in real time.
Take Apple or Google. The stereotype is that big tech teams ask off-piste, impossible interview questions. The reality is that companies like Apple use interviews to measure skills and potential over qualifications or experience. They hire based on soft skills like work ethic or problem-solving and provide plenty of training on the job.
This approach is also attractive to potential employees, who will feel more fulfilled in roles with the right learning and development opportunities.
Pro tip: Drawn-out interview processes can be off-putting to job seekers and a resource drain for hiring teams. If you have a good skills-based hiring process involving an objective test, there should be no need for additional interview stages.
9. Give feedback proactively
People talk. Any dissatisfaction with your hiring process is bound to affect your organization’s reputation and could damage morale internally too.
Following up on applications promptly and proactively offering constructive interview feedback will make candidates feel more valued and help them understand your reasoning.
To improve your hiring feedback process:
- Favor progress over perfection. Don’t expect any candidate to ace every part of the application. Look for the person who meets the core requirements but also has the capacity to grow and learn in the role.
- Use measurable criteria. Encourage hiring managers to refer to the interview scoring rubric and any objective scores obtained from skills-based tests. This will help them make informed decisions and formulate useful feedback afterward.
- Be specific. Where possible, use specific examples to give candidates a clear sense of what to improve on.
- Automate if time is short. The most constructive feedback is always personalized, so send a personal email to anyone who made it through to the interview stage. For those who didn’t, it’s acceptable to send an automated response. To make it more personalized and offer constructive feedback, you could include their skills test scores.
- Invite mutual feedback. Both your applicants and current team members should get the opportunity to give feedback on the hiring process. Use the results to improve the testing process for next time.
10. Don’t stop at hiring!
The final part of skills-based hiring is what comes next: growth. To get long-term benefits out of skills-based hiring, your company needs a continuous culture of professional and personal growth.
Capital One is well known for its career development center, which helps employees find mentors and work on their resumes. This reputation is important because learning and development opportunities are the second biggest priority for Gen Z and millennial job seekers after a good work/life balance.
So don’t be shy about your internal training and career development programs if you want to win the talent war.
To keep building on the benefits of skills-based hiring:
- Prepare personalized onboarding. Plan 6 to 12 months of onboarding for each role. It helps to have a template for this, but the best onboarding plans are customized to meet each employee’s skill and experience level.
- Create learning opportunities. Every employee should get the chance to gain new skills, but don’t put the responsibility entirely on them to seek this out. Build a process for identifying employees for reskilling and upskilling.
- Carry out regular performance reviews. Getting regular feedback makes employees feel valued and gives them benchmarks for success. These reviews don’t have to be intimidating, formal meetings (although it does help to have standardized ways to measure performance). Instead, you can use them as collaborative sessions for mutual feedback and development planning.
Find the best talent with bias-free, modern hiring practices
Skills-based hiring is gaining ground over traditional, bias-prone practices like relying on resumes, education, or connections. However, perceived challenges still hamper adoption for some businesses.
To overcome these challenges and start implementing skills-based practices, go for quick wins, like expanding sourcing pools or removing degree requirements from your job postings. Define the skills required for each role, test for them early, and make them central to the whole hiring process. Don’t forget to think about soft and transferable skills, too.
And remember to keep an eye on the long term: The impact of skills-based hiring is maximized when it’s implemented across the whole talent journey, from sourcing to hiring right through to ongoing employee development.
Whenever you’re ready to implement skills-based hiring, look for a library of skills tests and assessments you can use to screen candidates and make better, faster, and more objective decisions.
That way, you’ll be well on the way to finding the right candidate for your open positions every single time.
Want to become more competitive by hiring the right people for the job?
Skills-based hiring creates a more diverse, productive workforce and boosts hiring ROI.
Download the 2022 State of Skills-Based Hiring report to learn more.