Navigating the Shift to Skills-Based Hiring

Navigating the Shift to Skills-Based Hiring

February 06, 2024

The labor shortages of the past few years show no signs of slowing. Between the intense competition for talent and the changing nature of work, many organizations are retooling their recruitment practices to focus on skills-based hiring.

Skills-based hiring emphasizes candidates’ practical skills and learning potential over education and job experiences. However, changing your hiring practices isn’t as easy as flipping a switch. As with any transition, it requires planning and proven strategies.

The shift to skills-based hiring

The benefits of skills-based hiring include a bigger talent pool, increased diversity, higher employee engagement and reduced turnover.

Research from the Charles Koch Foundation and the human resources association SHRM highlights reasons to transition away from degree requirements and other traditional hiring practices. More than 60% of people over 25 don’t have a college degree. And college enrollment has declined by about 8% over the past five years.

The trend toward credentials, on-the-job learning and other alternative education and experience can increase diversity, engagement and loyalty. Employees with different life experiences bring new perspectives and ways of thinking. And 90% of apprentices stay with their company, according to the Charles Koch Foundation.

The following strategies can help you transition to skills-based hiring:

  • Identify essential skills.
  • Update job descriptions.
  • Conduct aptitude assessments.
  • Explore returnships.
  • Provide ongoing training and support.

Identify essential skills

Conduct a skills gap analysis to compare employees’ current skills and expected future requirements. Identify training and educational solutions to fill those gaps. Alternative pathways may include certifications, credentials, microcredentials, badges, apprenticeships and learning assessments.

Credentialing has increased 400% over the past five years, according to the Charles Koch Foundation. SHRM reports 45% of employees have a credential. And 49% of employees without a credential are interested in earning one.

But skills-based hiring isn’t just about alternative forms of learning. It’s also imperative to assess candidates’ learning potential. In addition to reviewing core skills for job positions, explore successful personality traits such as adaptability and desire to learn. Draw insights from the skill sets of your high-performing employees. Understanding and identifying these traits during the interview process is vital to skills-based hiring.

Update job descriptions

Review each role in your organization. Update your job descriptions to focus more on future abilities than direct experience. Identify training opportunities you can provide or candidates can pursue on their own. As you examine the critical skills required for each role, remove unnecessary credentials or degrees that create barriers to entry.

Conduct aptitude assessments

Use aptitude assessments to base hiring decisions on learning potential over education and experience. Interviews, skills tests, trial work projects and online tools can provide insights into candidates’ thought processes and ability to adapt to new information.

It’s essential to find assessments related to the actual work of the role. Assess soft skills as well as technical knowledge. Ensure the process doesn’t become too burdensome for applicants. Aptitude assessments should take one hour or less.

Explore returnships

Recruitment practices such as returnships can complement skills-based hiring efforts. Returnships are similar to internships in that you hire candidates for a set amount of time, often between two and six months. Where internships mainly occur with young employees in school or shortly after graduation, returnships are typically offered to individuals returning to their careers after an extended gap. 

Many of these candidates have extensive experience but stopped working for various reasons, often due to caregiving responsibilities. Both sides benefit from the work and experience, and you may decide to find a permanent role after a returnship.

Provide ongoing training and support

Professional development is vital to your employees and organization. Ongoing training helps employees adapt their skills to changing needs and technologies. Supporting technical knowledge, soft skills and career paths reinforces the traits you seek through skills-based hiring. It also demonstrates a commitment to learning and prepares your workforce to adjust as new needs emerge.

Overcoming barriers to skills-based hiring

Research shows employers are willing to implement skills-based hiring, but your organization’s ability to do so at scale could be a challenge. 

The Charles Koch Foundation reports 91% of CEOs want to expand hiring through skills-based means. However, only 43% of HR respondents said the same. The disparity lies in the resources and adjustments required by such a change. Screening and hiring processes must be reevaluated and adapted. It can be difficult or impractical, even with significant support and resources.

However, there are solutions to help with the transition to skills-based hiring. It often starts with a shift in mindset. Organizations have traditionally used education and job experiences as differentiating factors in hiring. But many jobs don’t require advanced degrees, specific experiences or other criteria. Additionally, with the emergence of new technologies like generative artificial intelligence, many jobs in the future may be so new they defy the idea of previous experience.

Credentials, certifications and other training can expand your candidate list and be targeted toward specific roles and skills.

Hiring managers also need support and training. Efforts should include which questions to ask candidates and how to evaluate responses. Creating a scorecard can ensure consistency, accuracy and fairness. A scorecard may include job-specific skills, cultural fit, growth potential and concerns. Scorecards can then be compared, with assessments ranking candidates on similar questions and categories.

Another strategy is to provide supervisors with a candidate’s name only. Instead of giving the supervisor a resume, which may bias them based on the candidate’s education or work background, ask them to have a conversation with each candidate. Train them on questions to ask and qualities to look for.

In addition, third-party organizations can train candidates for specific skills and identify proper placements.

To explore solutions

For more information on skills-based hiring, talk to your benefits adviser. They can help you understand implementation challenges and opportunities, examine aptitude assessment tools and training solutions, and vet third-party vendors.