How to adopt skills-based hiring practices in your organization

You’re hiring for the position of Head of Marketing.

Candidate A has a four-year degree in marketing and five years of experience working for another firm.

Candidate B has a Bachelor’s Degree, but his CV is patchy – but that’s because they’ve been traveling the world, growing their own business, and raising a family.

Let’s imagine that Candidate B’s real-life marketing skills make them a better candidate for the role. Employers who focus too heavily on experience and qualifications would dismiss their application.

But degrees and education don’t always translate to performance, so a hiring strategy centered around them could hold you back.

You need a fast, efficient method to identify the ideal candidate (say, one with flawless email marketing skills) – without unconscious bias getting in the way. Skills-based hiring practices keep your recruiting efforts focused on competencies and talent. 

Our step-by-step guide shows you how to adopt skills-based hiring practices in your organization so you can start filling positions effectively and efficiently.

What is skills-based hiring?

Skills-based hiring is the practice of screening and recruiting employees based on skills and talent rather than work background and schooling.

For example, a hiring manager may implement online skills tests in their hiring strategy rather than extensive resume scanning.

As a result, the successful candidate has direct skills applicable to the role, even though they may not have a formal qualification. 

But if the hiring manager had used a traditional hiring process, they might not have found them.

Why is it important to adopt a skills-based approach to hiring?

Why is a skills-based approach so important?

Let’s take a look at the difference between traditional and skills-based hiring.

Traditional recruiting uses degrees, references, and experience to represent talent. This can be risky for two main reasons:

1. Resumes and CVs can be unreliable and dependent on interpretation (and bias)

2. A college degree doesn’t necessarily equate to how well a candidate performs

A core example of where degrees and qualifications don’t equate to capability is marketing and social media.

Marketing is evolving so quickly that degrees and formal education quickly become outdated.

Practical, hands-on skills are a much more accurate way to test ability. A candidate who has experience running their own business or growing their own social media following has up-to-date, marketable knowledge and skills.

Plus, if they’ve put their own money behind their marketing expertise in the past, you can rest assured that they’ll take care of your marketing budget with the same care.

Skills-based hiring focuses on the capabilities a candidate brings to a role and whether or not they can get the job done.

Skills-based hiring brings with it a wealth of benefits, because it helps you:

• Minimize bias: Hiring for skills eliminates bias based on qualifications and work experience

• Bridge the skills gap more easily: Many candidates with the right skills may not meet traditional degree requirements

• Widen the talent pool: A position that requires qualifications and experience narrows the hiring pool

• Attract more diverse talent and hire a more diverse workforce: Professionals from many marginalized groups don’t have formal qualifications, so eliminating credentials from the hiring process improves company DEI; this also opens up opportunities to minorities and those with disabilities

• Reduce costs: Finding the right candidate faster reduces the cost of hiring, onboarding, and training for each role

Skills-based hiring practices are on the rise for a good reason, but that doesn’t mean all degrees are irrelevant. Some qualifications are required by law, including medical degrees.

Read our article on skills-based hiring for in-depth information on the benefits, how it compares to traditional hiring, its rising demand, and more.

How to adopt skills-based hiring practices: the 8-step guide

A data-driven approach to hiring and developing talent is effective, efficient, and appealing to the modern attitude.

So how can you adopt this approach in your hiring strategy?

Our step-by-step guide details how you can implement skills-based hiring practices into your process.

Here’s a quick summary of the eight steps:

Let’s discuss these in-depth, shall we?

1. Start small

If you want to take up running, you wouldn’t start with a marathon, right? Well, the same applies to your recruitment. 

You don’t need to redefine your entire hiring strategy to start adopting skills-based hiring processes.

Try a skills-based approach for a portion of your hiring process at first. For example, you could hire for skills for just a handful of positions in your company.

Which positions should you start with? Start with roles with…

• High turnover rate

• The longest time to hire

• Emerging skills

Roles with a high turnover rate benefit from the increased employee retention that skills-based hiring brings, and roles with a high time to hire benefit from the improved hiring speed.

A skills-based approach to emerging skills is essential. Certain capabilities, like leveraging blockchain technology or creating TikTok videos, are so new that formal education will not be as updated and valuable.

For some new skills, formal education may not even exist yet.

2. Conduct a skills-gap analysis – where is your organization missing talent?

A skills-gap analysis is a method companies use to compare the skills needed for a job role with the skills their workforce currently possesses.

Performing a skills-gap analysis is a crucial part of skills-based hiring and benefits employers and employees alike.

In short, you conduct a skills-gap analysis by:

• Defining company or department goals or KPIs

• Asking your team leaders to provide insights on what’s holding them back from achieving their goals or what to watch out for

• Identifying the skills and capabilities that would make the biggest difference

• Measuring skills internally and identifying gaps

• Providing training and mentorship to employees, focusing on the most critical skills

• Creating job descriptions based on missing skills to bolster your team

A 2020 survey by McKinsey showed that 44% of companies will face skills gaps in the next five years, and 43% are experiencing them right now.

A skills-gap analysis helps you assess which skills are missing from your workforce, so you can focus on hiring people with those capabilities.

After performing this analysis, you’ll have a firm grasp on what knowledge your workforce lacks and which abilities are critical for the roles you’re currently trying to fill.

You’ll also have insight into a different part of the skills-based approach – internal hiring. A skills-gap analysis also helps you identify gaps that your current workers might be able to fill. Your current sales rep may not have the formal qualification of a recruiting manager, but they could have the right qualities.

Creating an internal talent marketplace helps connect existing employees to hiring managers and provides great opportunities to both sides.

When you’re aware of the skills necessary to run your business efficiently, you can streamline your hiring strategy manifold.

3. Identify a role to recruit for and establish the core skills needed to succeed

You’ve conducted a skills-gap analysis and now know which skills each position requires as a baseline and which departments need support.

It’s time to determine the core abilities you need to assess for the role. This will inform your job description, job posting, and skills tests.

One of the best ways to do this is by using your most solid available resource: your team.

Speak to line managers and successful employees who’ve been in the role to get their insight on the most critical skills for the position.

Having an inside perspective on the key abilities enables you to find a candidate with the exact skills needed – not just the textbook criteria like having finished high school or being a college graduate.

Here are a few examples of roles and the qualities required to fill them:

You’ll notice the same skills repeated in the above table – using a skills-based approach means also being aware of the fact that candidates with transferable skills can be a perfect match in a completely different role or industry.

You can find unlikely but perfect hires with the help of our transferable-skills checklists.

Finding the core qualities needed to succeed in a role helps you boil down the requirements for the position to the essentials and enables you to frame your hiring strategy around the right candidates.

4. Try skills-based job descriptions

A skills-based approach requires writing job descriptions that focus on skills rather than on diplomas.

Write your job descriptions in a way that puts forward skills, achievements, and capabilities.

It’s a crucial part of your skills-based hiring practices, and job seekers want it, too. A LinkedIn study showed that including a “Responsibilities” section instead of a “Requirements” section increased the application rate by 14%.

Once you write it, scrutinize your job ad – remember to focus on the skills needed, keep in mind the results you want, and remove unnecessary obstacles like degrees.

Of course, you still have to keep degrees where they’re required, for example in healthcare, engineering, and law.

As you write the job description, ask yourself a few questions:

• How is this role important to the company and what opportunities are at hand?

• What are its day-to-day responsibilities and key hard skills?

• What are our expectations of success and what relevant soft skills does the candidate need?

And try to keep it as short and concise as possible – job ads that are 300 words or less receive 8.4% more applications than longer ones.

Here’s a quick example of a skills-based job ad for a senior software engineer:

[Insert your company description]

[Insert the role description]

Responsibilities

• Build new integrations with a growing number of retailers

• Coach and mentor junior teammates

• Solve integration issues with retailers

• Document and manage the stability of our platform

• Scale, improve, and maintain our checkout system for processing orders

• Write unit and integration tests

• Work primarily with Python on the backend

• Work in a fully AWS-hosted environment using a range of tools and setups

Requirements

• Proven experience with Python

• Curiousity and desire to learn other programming languages

• Familiarity with React, modern JavaScript, HTML, and CSS

• Solid communication skills

[Insert your benefits and insurance plans]

Did you notice that the “Requirements” section listed required skills and not work experience or degree?

Focusing on the skills the ideal candidate needs to have to be successful in the role is the key to skills-based job descriptions.

5. Use screening tests to pinpoint candidates with the right skills

Online skills assessments are essential in skills-based hiring. 

Skill assessments give you a concrete idea of applicants’ performance and skills, contrary to resumes, which simply inform you of candidates’ experience and self-assessed qualities.

Skill tests allow you to:

1. Evaluate a candidate’s skills efficiently and without bias

2. Keep your hiring efforts focused by testing for specific skills

You not only filter out the unqualified candidates more quickly, but you also zero in on the exact skill set you need.

TestGorilla’s skill assessments enable you to add up to five skill tests per assessment. And what’s even better is that you can mix and match tests from different categories including hard skills, soft skills, language proficiency, and personality tests.

Let’s see what a sample assessment would look like for our senior software engineer role from the last section:

1. Python: Data Structures and Objects test

2. JavaScript: Data Structures and Data Types test

3. Working With Data test

4. Communication test

5. Motivation test

Upon completion of the skills tests, candidates are ranked by their skill level, regardless of their experience or degrees.

You might have never found the perfect candidate if you relied solely on resumes and CVs.

Online skill assessments are an efficient way to assess and validate the key skills needed for the role, rather than just read about them on a resume.

6. Run structured, skills-based interviews

Some traditional processes are becoming outdated in the modern era – but not interviews.

An interview is still essential in a skills-based hiring world. 

They help you build rapport with your candidate, assess culture fit, and understand how a candidate’s unique expertise and capabilities align with your requirements and your team’s context.

Here’s how you conduct skills-focused interviews:

• Ask the candidate to define their perception of the ideal candidate – check if they mention the skills you’re looking for

• Ask for examples of when the candidate has displayed each of the skills you’re looking for

We recommend a structured interview – the process of asking all candidates the same or similar questions in a similar order. 

If you opt for a non-structured interview and give hiring managers the opportunity to “wing” the interview process, candidates don’t get equal opportunities to demonstrate their expertise.

A hiring manager might forget to ask an important question or go on a tangent because they started talking about their mutual interests with the candidate.

In these scenarios, candidate performance is left up to chance. Unstructured interviews can feel natural and easy, but even hiring managers with the best intentions risk making biased evaluations from them. 

For more information and an in-depth comparison, read our article on unstructured vs. structured interviews. 

7. Transition to skills-based hiring for more and more open positions

Once you’ve successfully applied skills-based hiring practices, you can document and scale this process throughout your organization.

Maybe the first roles you filled were junior positions or the ones with the highest turnover – as you continue, you can try a skills-based approach for more significant, higher-level or even leadership roles.

The more roles you transition to a skills-based hiring approach, the more benefits you can expect for the company, such as:

• A competitive pool of applicants: The more you focus on a candidate’s talents instead of qualifications, the more qualified candidates you’ll see

• Reduced hiring costs: Zeroing in on the ideal hire reduces turnover, which in turn reduces hiring and onboarding costs

• Faster, more efficient hiring: Accurately assessing a candidate’s abilities sooner rather than later leads to a faster process

• A better brand image: Skills-based hiring is the future of recruitment, so holding that practice helps you build a strong employer brand 

When you hire for skills, you’re hiring for the future, and your candidates know that.

That’s why skills-based hiring practices reflect well on your company and you can expect to attract diverse talent with the help of your new hiring strategy.

8. Bonus: offer training and development opportunities for new hires and employees

Do skills-based practices end after recruitment?

Not on our watch.

Continue to promote a skills-based work environment by offering learning, development, reskilling, and upskilling opportunities to employees. One study revealed that 94% of employees would stay with a company longer when given opportunities to develop and upskill.

Skills-based development is an opportunity to fill skills gaps and create opportunities internally. Start with a skills-gap analysis to determine what your employees need and help them grow and achieve it.

Upskilling and learning opportunities carry many advantages, because they:

• Improve retention

• Increase employee satisfaction

• Improve your company’s brand

• Attract new talent

• Help you respond to the company’s growth

A skill-centered work culture is the future, and you and your employees will reap the benefits. 

Read our guide to learning and development for in-depth details of employee upskilling, its benefits, and how you can make learning an ongoing process.

Build your skills-based hiring process

Learning how to adopt skills-based hiring practices won’t just improve hiring speed and reduce recruitment costs…

A skills-based approach also helps human resources identify the ideal candidate that you may never have found using other recruitment methods.

Online screening tests and structured interviews enable you to zero in on the right talent, regardless of degrees or qualifications.

There are millions of worthy candidates out there that a traditional hiring approach wouldn’t consider, and that’s why we believe that skills-based hiring is the future of recruitment – while CV screening is a thing from the past.

For more insights into a skills-based workforce, read our articles on pre-employment skills testing and upskilling employees.

And if you want to hit the ground running, our Communication test is a great place to start online testing.