Skills-based hiring is a new buzzword in the HR field. Does this mean that skills-based hiring will change the way we hire people forever? Are there any tangible benefits for businesses and employees? Let’s find out in our new blog post.
Skills-based hiring vs degree-based hiring. What’s the difference?
The concept of skills-based hiring is straightforward. It’s a hiring approach that concentrates on a candidate’s practical skills and performance rather than formal qualifications.
Feel the difference: HR managers would focus on fitting a candidate to a job profile in the past. They would sift candidates through prerequisites like education degrees, pedigree, personal referrals, and other employer requirements. In the end, the candidates that passed the most checkboxes made it to the interview and getting an offer.
The COVID-19 pandemic put things in perspective. For example, in May 2020, 73% of the US domestic workers experienced negative impacts like reducing working hours or complete job loss. Domestic workers weren’t the only category of workers that were left behind. The International Labor Organization (ILO) estimated that the pandemic would leave more than 140 million people without their jobs.
Therefore, the pandemic became a turning point in employee upskilling and reskilling. In 2020, LinkedIn launched the Career Explorer tool to help dismissed workers find possible career transitions based on their skills. The tool mapped the available candidate’s skills and detected extra skills candidates could learn to switch their occupations.
It turned out that workers and employers wouldn’t realize their upskilling opportunities. A vivid example of workers with a great upskilling potential included food workers. Waiters, hostesses, and other workers involved in the food industry demonstrated up to 71% similar skills to customer service specialists.
That’s a win-win situation for both employers and potential employees. For example, employers could quickly fill in positions and save costs on training and onboarding. Employees, in their turn, could seamlessly transfer to new positions without losing their income.
That’s the essence of skills-based hiring. This approach focuses on hiring people for their actual skillset, not their past careers, working history, and track records.
Does it mean the revolution in degree-based hiring? Not really. We must admit that many job roles still require formal certifications, education degrees, and considerable experience. Therefore, skills-based hiring is a perfect strategy for low- and middle-skill jobs.
While technology fields have been the first to embrace a skills-based approach, the strategy could have far-reaching applications. ‘Skills-based hiring is relevant to any job.’ – Beth Cobert, COO Markle Foundation
The following section will touch upon the tangible benefits of skills-based hiring for employers and workers.
Benefits of skills-based hiring
1. Wider talent pool
LinkedIn estimates that the average time-to-hire in the US is 30 days. One of the reasons why businesses can’t fill in positions faster is that they review skills at the latter stages of screening interviews. Thus, they miss out on the vast pool of candidates, focusing on college degrees and years of experience instead of actual competencies.
Therefore, it makes sense for organizations to technically lower their entry bar by accepting candidates without formal education degrees and pedigree in the first place. This strategy helps employers tap into a wider talent pool and fill in the positions faster.
2. Accelerated time-to-hire
In the pre-COVID-19 area Q1 there were 1.5 million jobs worldwide while in Q2 in the post-COVID time there were only 1 million jobs. The peak of job postings was in the middle of February — 165K jobs postings were available on the market. The lowest point was in the 3rd week of April — only 71K jobs searched. That’s a decline of almost 60% from the top to the bottom in just 2 months! If we look at averages, average, between Q1 and Q2 job investment has decreased by 30% globally. Looking at the last two months, May and June, we can already see again a slight increase of around 15%.
3. Reduced costs
A bachelor’s or master’s degree doesn’t always guarantee that candidates received skills-based education and enough competencies to get the job done. By addressing the skills offhand, employers can save their costs on training and employee onboarding in the long term.
4. Improved retention rates
According to LinkedIn research, candidates without four-year college degrees stay with companies 34% longer than their peers with degrees. One of the contributing factors to higher retention rates is the candidate’s engagement and readiness to give back.
5. Great diversity potential
Skills-based hiring also helps businesses get a more diverse, inclusive workforce – like veterans or people with disabilities – on board. For instance, 62% of the American population over 25 years old don’t possess a college degree. Having this requirement in your job posting puts off a considerable part of minorities and vice versa. You can open these opportunities by focusing on skills, not degrees.
How to adopt skills-based hiring practices
1. Take small steps
Startups never launch their products without hypothesis testing with real users. You don’t need to redefine your whole recruitment and hiring process either. Start with vacancies with the highest time-to-hire and turnover rates. Thus, you can find the root cause (like skills gap) and test a new hiring approach.
2. Rewrite your job descriptions
Jobs descriptions are a front door of a hiring process. HR experts recommend rewriting your job descriptions in a way that helps candidates focus on the merits, competencies, and skills.
According to LinkedIn, job descriptions that highlight responsibilities instead of formal requirements get 14% more incoming CVs per view. Thus, replace the “Requirements” block with “Responsibilities” to indicate the actual tasks a candidate will face in their job.
To specify your requirements, better concentrate on the results you want to see. For example, highlight quantitive KPIs for a job role or actionable results you want to get from candidates.
3. Focus on skills
It doesn’t sound surprising, does it? Once you’ve decided to step on the skills-based hiring track, leverage techniques like skills-based assessments and coding tests to elicit candidate’s practical soft and hard skills. Step away from the candidate’s education, working experience, and testimonials. The idea of skills-based hiring is to check the current job-related skills without too much weeding out candidates because of their irrelevant work background or lack of it.
If want to switch from degree-based hiring to skills-based hiring, study all pros and cons. Generally, skill-based hiring perfectly suits entry-level and middle-skill jobs that (in most cases) don’t require four-year college degrees and practical experience.
Overall, it’s a great hiring approach that puts candidates and their practical skillset to the cornerstone. It’s proven that skills-based hiring improves diversity in the workplace and helps cut HR costs on training and onboarding.