The rise of skills-based hiring and what it means in recruitment

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The world of work is changing.

With the rise of skills-based hiring, businesses are starting to place a greater emphasis on what potential employees can do rather than on their degrees and where they got them. 

Although the shift toward skills-based recruitment has been accelerated by the Covid-19 pandemic, it’s not new.

According to The Burning Glass Institute, employers already reset the degree requirements for 47% of middle-skill and 31% of high-skill roles between 2017 and 2019. 

This structural change is the result of the demand for talent exceeding the supply, a trend that has been further accelerated by the pandemic. And this trend brings new hiring priorities.

As a result, more and more organizations are hiring based on skills and not degrees – and with excellent results. 

This is also why we believe that the history of the CV is coming to an end.

Today, applicants need to show, rather than tell, what they’re capable of.

The shift toward skills-based hiring has many implications for both employers and employees:

  • Employers need to reset degree requirements for many jobs and find new ways to assess candidates’ skills and expertise reliably

  • Employees need to be ready to prove their skills – regardless of the diplomas and certificates they hold

In this article, we’ll discuss the shift toward skills-based hiring, describe what it means for organizations, and explain how a skills-based approach can help you make the most of your recruitment budget.

Why you should think twice about requiring a college degree

Skills gaps are among the most pressing problems that businesses face today.

According to a survey by McKinsey & Company, nearly 9 out of 10 executives say their organizations are either already experiencing skills gaps or expect to within the next five years.

It’s becoming increasingly difficult for companies to source and hire employees with the necessary skills and qualifications, especially in fields that experience rapid technological disruption and growth.

According to the same survey, the domains with the greatest need to address talent gaps are data analytics, IT, executive management, and HR. 

To fill skills gaps, companies need to adapt their approach to the challenges of the current job market.

Although some employers continue to require a college degree even for entry-level positions, many have noticed that degree-based hiring is becoming obsolete. 

Requesting a college degree for all, or nearly all, positions might lead to the following:

1. A narrower talent pool

If your requirements for a role are too specific, you might miss out on great candidates who don’t quite fit the bill but have the right experience or could be trained for the role.

2. A larger skills gap

If your company is only considering candidates with a college degree, you might be artificially making your skills gap larger.

There might be many skilled people without a college degree who could do the job just as well, if not better, and who have developed their skills in a different way.

3. A less diverse workforce

College degrees are becoming increasingly expensive in the US; by requiring one, you might be unwittingly excluding candidates from lower-income backgrounds.

If you’re only considering those with a specific background, you’re missing out on the opportunity to hire employees from all walks of life and benefit from a true diversity of perspectives and experiences. 

4. A longer time to hire

The skills gap is already leading to a longer time to hire since it takes more time to find talent with the right skill set.

If you require a college degree for all positions, you’ll only make the problem worse because it’ll take you even longer to find candidates with the right skills and degrees. 

To stay ahead of the curve and make better hiring choices faster, you should consider implementing a skills-based approach to hiring.

This will improve your chances of hiring a diverse, skilled workforce that can drive performance and help you excel – even if your employees don’t all have degrees. 

What skills-based hiring is and why it’s on the rise

To adapt to the challenges outlined above, many companies have shifted away from degree-based hiring to skills-based hiring.

Employers are increasingly looking for candidates who have the right skills for the job rather than those who have a specific degree. 

That’s exactly what skills-based hiring is: Instead of making a hiring decision based on candidates’ degrees and interview performance, employers who use skills-based hiring define specific skills requirements or targets that candidates need to meet to be considered for the position.

This way, they make sure candidates have the necessary skills to do the job instead of concentrating on their CVs. 

With skills-based hiring, you need to test applicants’ soft and hard skills to make sure there’s a good skills match. You also need to assess candidates’ cognitive ability.

Let’s look at some examples of each and see why it makes more sense to test for these skills instead of relying on candidates’ degrees.

The purpose of skills-based hiring is to: 

  • Help HR professionals assess applicants’ skills with minimal bias and without relying on degrees, shifting the focus from CVs to skills assessments

  • Enable candidates to show whether they have the right skill set for the job, independent of their past academic achievements and degrees

Skills-based hiring enables employers to identify qualified, knowledgeable candidates more efficiently and precisely. It also gives candidates a chance to show their skills and abilities objectively. 

Why is skills-based hiring on the rise?

There are a number of reasons for the shift toward skills-based hiring.

image explaining why skills-based hiring on the rise

1. The skills gap

With skills gaps getting wider, employers need to find new ways to assess candidates’ abilities and eliminate requirements that are no longer relevant. 

2. The changing nature of work

The way we work is transforming. Many jobs that didn’t exist a few years ago are now in high demand. This means that the skills employers are looking for are also changing at a rapid pace.

We don’t yet have degree programs for the jobs of tomorrow, and by the time we do, the jobs will have changed. 

3. The rise of online learning

The proliferation of online learning platforms has made it easier than ever for people to learn new skills. This means that candidates who might not have had the opportunity to get a traditional college education can still acquire the skills they need for the job.

4. Self-employment and alternative career paths

Many individuals no longer follow the standard career path of obtaining a degree, finding a position that they stay in for many years, changing jobs once or twice, and then retiring. 

Millennials, for example, are much more likely to change jobs.

According to a Gallup survey, 21% of millennials say they have changed jobs within the past year, which is more than three times higher than respondents in other age groups. 

Though job changes don’t necessarily imply career changes, this shows that millennials are much more flexible and likely to acquire new skills as they go. 

Self-employed individuals also often upgrade their skills on their own or pursue online certifications to gain new skills. 

Examples of skills to test for in skills-based hiring

To assess candidates’ abilities in the context of skills-based hiring, you need to test for a variety of skills. 

The specific skills you test for will depend on the job requirements, but here are some examples of soft skills, role-specific competencies, and cognitive abilities you might wish to assess. 

Examples of soft skills

You can test for soft skills such as:

image showing examples of soft skills
  • Communication: Communication is essential for nearly any role, which is why it’s also one of the most important skills to test for. 

  • Negotiation: Negotiation skills are necessary for most jobs in sales, management, marketing, business development, law, and more. 

  • Problem-solving: Problem-solving is another core skill that is relevant for many positions and domains, and it is crucial for technical, accounting, and management roles.

  • Teamwork: Employees’ capacity to work in a team can make all the difference when they need to co-operate with many other people on complex projects. 

  • Time management: Candidates who have good time-management skills will be able to better plan their day-to-day tasks. 

Obviously, there are no degrees for soft skills, meaning that you need to use skills-based hiring to assess soft skills reliably. 

Examples of role-specific skills

You’ll also need to test for the core role-specific skills that are relevant for the job. Below, you can find some examples: 

image showing examples of role-specific skills
  • Account management: For account management roles, it’s important to assess candidates’ ability to effectively serve and expand accounts.

  • Technical SEO: For jobs that require strong technical SEO skills (such as an SEO expert, SEO analyst, or SEO manager), you need to evaluate candidates’ skills in analyzing websites’ performance and improving their rankings in search engines. 

  • B2C/eCommerce growth marketing: B2C growth marketers need solid multi-domain marketing knowledge to build growth strategies for eCommerce businesses. 

  • Cybersecurity: Cybersecurity professionals should have a solid understanding of important key fields, such as endpoints, networks, and web security. Assessing their skills in these areas will help you identify experts for various cybersecurity roles.

Many of these skills are not taught in school, and the jobs in which they’re needed have only emerged in the past 10 or 20 years – which is the case for an increasing number of jobs and skills. 

Numerous fields are becoming more and more dynamic, especially those like IT, digital marketing, AI, and data analytics.

Even if colleges and universities start including skills relevant to these fields in their curriculum, by the time someone finishes a four-year college degree, the skills they gained might already be largely outdated. 

For roles that require such skills, the right knowledge and experience are much more important than a degree. Still, employers might sometimes request specific certifications.

Examples of cognitive skills 

In skills-based hiring, you can benefit from testing cognitive ability, as well. Some cognitive skills you can test for include:

image of examples of cognitive skills 
  • Critical thinking: Being able to evaluate information and make sound judgments using analytical skills is necessary for many medium- and high-complexity jobs. 

  • Numerical reasoning: You can assess candidates’ general aptitude with numbers and their skill in using them in different fields.

  • Problem solving: In complex situations, employees need to be able to define problems, analyze data, and consider many different elements to make correct decisions.

For the best results, consider testing for a combination of skills, preferably from different skill types and groups. 

Skills-based hiring vs. degree-based hiring

In some fields, employers definitely need to make sure applicants have a degree (such as engineering, medicine, or science). But in others, a skills-based approach to hiring makes much more sense. 

There are a number of reasons for this.

For one, many skills can be learned much faster than a four-year degree can be obtained. With proper training and onboarding, you can bring an employee with the right skills up to speed fairly quickly.

In addition, skills-based hiring enables you to tap into a wider talent pool. There are many talented people who don’t have a college degree for a variety of reasons.

By requiring a degree, you may be unnecessarily narrowing your pool of potential candidates.

Finally, skills-based hiring can lead to a more diverse workforce.

In our increasingly global economy, it’s more important than ever to have a workforce that reflects the diversity of the world around us.

By basing your hiring decisions on skills instead of degrees, you can help create a more diverse and inclusive workplace.

Degree-based hiring will still remain relevant for some fields, but for others, skills-based hiring will define the future of recruitment. 

Are degree requirements really going away?

College degrees are becoming increasingly irrelevant for many roles, especially emerging jobs, like full-stack engineers, customer success specialists, and back-end developers. 

For some jobs, however, degree requirements are a necessity and sometimes even mandated by law.

In these instances, they won’t go away in the foreseeable future. You might need to find a balance between skills-based and degree-based hiring for these kinds of positions.

The exact requirements depend on the country, but here is a list of jobs for which degrees are still relevant and required:

  • Engineering

  • Medicine and related fields (e.g., dentistry, nursing, pharmacology)

  • Veterinary medicine

  • Law

  • Architecture and construction

  • Research

  • Aviation

  • Teaching

Here are some examples of fields in which degrees are less relevant: 

  • IT and software development

  • Customer relations

  • Accounting

  • Marketing (especially digital marketing)

  • Hospitality

  • Consultancy

  • Sales

  • Property management

Formal training can still be a definite advantage for these fields, and some employers still request a college degree. 

Many, however, are open to hiring employees who have other types of training. According to a survey by Wiley University Services and Future Workplace, 90% of surveyed HR leaders said they were open to hiring candidates with recognized certifications, online degrees, or even digital badges from online courses. 

This means that although industry certifications are still relevant, many employers realize adhering to strict degree requirements simply doesn’t make sense. 

The benefits of skills-based hiring

Skills-based hiring can offer you many benefits. Let’s look at some of the most important ones. 

image showing benefits of skills-based hiring

1. Wider talent pool

Skills-based hiring enables you to tap into a much wider talent pool since you’re not artificially narrowing it with degree requirements. 

This is especially beneficial for jobs that are in high demand but have relatively few applicants with the relevant skills.

2. Accelerated time to hire

For “hard-to-fill” jobs, the median time to hire is well over a month, according to LinkedIn data.

Skills-based hiring can help speed up the process since you can focus on testing for skills right away instead of having to find candidates with the right degrees first.

Skills testing can be quick and efficient if you use an online skills-testing platform. You simply need to administer skills tests to all your candidates and let the platform calculate the test scores. After that, you just have to compare scores and invite the shortlisted candidates to an interview. 

3. Reduced costs

Skills-based hiring can help reduce costs, as well. 

This is because skills-testing platforms make it possible to test for skills quickly and efficiently. You don’t need to spend time and resources on screening candidates manually or conducting long and expensive assessments or interviews.

4. Improved retention rates

When you use skills-based hiring, you show your candidates you value their skills above all else, which contributes to building a positive employer reputation.

Additionally, according to LinkedIn data, employees without a four-year college degree tend to stay 34% longer at a job than those who have one. 

You might also reduce turnover rates by better matching applicants with positions. When you hire based on skills, you’re more likely to find a candidate whose skills match the specific requirements of the job. This leads to a better fit between the employee and the role and improves job satisfaction and performance. 

5. Great diversity potential

By basing hiring decisions on skills instead of degrees, you can create a more diverse and inclusive workplace.

College degrees can be prohibitively expensive for some people, which doesn’t mean they’re not capable of acquiring the relevant skills. With skills-based hiring, you’ll be able to confidently hire candidates from all walks of life and be sure they have the right skills for the role. 

6. Better employer brand image

Skills-based hiring also provides many advantages for applicants. Therefore, using this approach will improve your employer brand and make your company more competitive in attracting top talent.

With skills-based hiring, applicants: 

  • Have access to more jobs even if they don’t have a degree or have the “wrong” degree

  • Enjoy better job mobility within organizations

  • Have a clear idea about the skills they need to grow in their career

  • Can reskill and upskill fairly easily

How to adopt skills-based hiring practices

To benefit from skills-based hiring, you need to have a solid skills-assessment process in place.

In this section, we’ll look into some of the key elements that you need to consider and give advice on the best practices.

image showing how to adopt skills-based hiring practices

1. Perform a job analysis to define the core competencies for the role

The first step of creating a skills-based hiring process is determining the core skills you need to evaluate. 

To accomplish this, you can use the job description of the role you’re hiring for and define the three to five core competencies the successful candidate must have. 

For example, if you’re looking to hire an admin assistant, these might be: 

Or, if you’re trying to find a UX/UI designer, you might look for candidates with these core competencies:

Or, if you’re hiring a branch manager, you might need them to have the following core skills:

2. Rewrite job ads to focus on skills

If you’d rather hire applicants for their skills than their degrees, you also need to rethink your job ads. 

Remove outdated or unnecessary degree requirements, and only ask for a degree if you absolutely need one for the job in question (for example, if you’re hiring an engineer or an architect). 

Instead, concentrate on the core skills of the job, as well as on the soft skills your ideal candidate should have. 

3. Use online skills assessments

One of the best ways to assess candidates’ skills is by using online skills assessments. 

Skills-testing platforms like TestGorilla enable you to objectively evaluate candidates’ abilities and strengths, which is instrumental in making informed decisions about whom to hire.

With skills testing, you can quickly filter out unqualified candidates and shortlist the ones who have the right skill set for the job. 

Once you have defined the core competencies for the job you’re hiring for, you need to pick the relevant skills tests to administer. TestGorilla allows you to combine up to five skills tests in a single assessment. You can select tests from a number of categories, such as: 

You can also personalize the tests with your brand’s colors or a short video intro, and you can use custom questions to adapt the tests to your exact hiring needs. 

There is also an option to use one-way video interviews, which enables you to ask candidates to answer questions by recording short videos.

This way, you can further evaluate their communication and presentation abilities, as well as their fluency in a given language (particularly their speaking skills).

4. Conduct interviews with your top candidates

With skills-based hiring, interviewing is still an important part of the hiring process because it enables recruiters and hiring managers to gain a deeper understanding of candidates’ skills. 

Structured interviews, in which you ask candidates the same questions in the same or similar order, can complement an initial skills assessment very well.

However, you should conduct them toward the bottom of the hiring funnel since they’re the most resource-intensive part of recruitment. 

Enable skills-based hiring through skills matching

Skills matching, a process in which you match prospective employees to a job based on their skills, can be a valuable tool if you’re experiencing rapid growth and need to hire for many positions at once.

In this context, you can look into your talent pool and identify the best potential candidates for jobs, even if they haven’t applied yet – or have applied for a different role. 

For example, if an extremely skilled candidate applied to job A, but you see they’d be a better fit for job B, encourage them to apply for it as well, or simply discuss it with them during the interview. 

You can also use skills matching internally as a part of your talent-mapping strategy.

To do this, you need to carefully analyze the skills of your workforce, including skills that your employees aren’t currently using in their jobs, and find ways to match them to opportunities that would better enable them to use their skillset and grow. 

The talent gap

The talent gap, or the space between your employees’ current skills and the skills you need them to have to achieve your business goals, is a problem many organizations are facing nowadays.

Skills-based hiring can help you close the talent gap faster than other approaches by shortening the time to hire and keeping hiring costs low while helping you concentrate on applicants’ skills before all else. 

You can invest the resources that you free up with skills-based hiring into creating better onboarding processes or relevant learning and development opportunities for your existing workforce – which, in turn, will help you close skills gaps at your company.

In short, to effectively bridge the talent gap at your business with the help of skills-based hiring, you need to: 

  • Understand what skills you currently have and what skills you still need

  • Build a comprehensive skills-based hiring strategy

  • Invest in redeploying, upskilling, and reskilling your workforce to help your employees grow

  • Keep up to date with future skills trends to prevent shortages 

Paradoxically, skills-based hiring can sometimes create a skills gap.

When employers place a greater emphasis on skills, they may be less likely to invest in training and development for their employees.

This can lead to a situation in which there are not enough people with the skills needed to meet the demands of the workforce. 

For this reason, it’s important to invest in hiring and in learning and development in parallel and not only focus on hiring to fill gaps. 

The future of hiring

Even though skills-based hiring can have some drawbacks, it can also enable you to create a less biased hiring process and thereby hire a more diverse workforce. 

For this reason, we can confidently say that skills-based hiring is the future of hiring, thanks to its many benefits.

Skills-based hiring: 

  • Is more objective and less biased

  • Gives you access to a larger talent pool

  • Enables you to hire a diverse and inclusive workforce

  • Improves the quality of hire, reducing the risk of making bad hiring decisions

  • Shortens the time to hire

In addition to all that, it also prepares you to better face the challenges of the future and hire employees in emerging jobs.

With TestGorilla, you’ll find the skills-based hiring process to be simpler, faster, and much more effective. 

Get started for free today and start making better hiring decisions, faster and bias-free.

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