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July 22, 2024

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Skills-Based Hiring: Everything you need to know

In today’s rapidly changing world, transferable skills are becoming increasingly important. As technology evolves at a rapid pace, having a strong ability to learn new things (a transferable skill) is more valuable than simply knowing all the details about current software (a job-specific skill). This adaptability ensures that employees can quickly adapt to and master new technologies as they emerge, rather than being limited by outdated knowledge.

This blog explores what skills-based hiring is, its benefits, and how to implement it in your organisation.

What is a skills-based approach to hiring?

Skill-based hiring is a recruitment method that emphasizes evaluating candidates based on their demonstrable and relevant skills necessary for the job, rather than relying on traditional qualifications such as educational background or prior job titles. This approach prioritizes objective, measurable abilities that highly correlate to future job performance.

Hard skills and soft skills

The skills necessary for the job or role can be categorised in transferable skills (also known as soft skills) and job-specific skills (also known as hard skills). Transferable skills are general skills that can be applied across various job roles and industries. They are more about how individuals interact, manage their tasks, and adapt to different environments such as: problem-solving, learning ability, teamwork, adaptability, etc. Job-specific skills are technical abilities and knowledge directly related to performing a specific job, such as: proficiency in specific software, coding languages, legal knowledge for lawyers, clinical skills for doctors, etc. These skills are crucial for roles that require specialised knowledge or technical capabilities, such as for doctors, data analysts, lawyers, and software engineers.

Reading tip: Skill-based Hiring: Transferable Skills vs. Job-Specific Skills

What are the benefits of Skill-Based hiring?

1. Longer tenure and retention

According to BCG, candidates that were hired based on skills tend to have a 9% higher tenure on average compared to traditional hires. Skills-based hiring can more accurately predict job fit, which boosts retention rates.

2. Improve your quality of hire

Skills-based hiring can better predict future performance in the selection process, as skills are more predictive of success than education and work experience. Research from LinkedIn reveals that employers who recruit based on skills are 60% more likely to make successful hires than those who don’t consider skills in their hiring process.

3. Expand your talent pool

When you prioritise skills-based hiring, your talent pool expands because more candidates from unconventional backgrounds (such as people who switch careers), who may have been overlooked before, now meet the screening requirements.

4. Diverse talent gets an equal chance

Skills-based hiring emphasises candidates’ abilities over traditional factors like education, a semester abroad, or a board year, which often reflect a person’s socioeconomic background. By focusing on actual skills instead of just CVs and cover letters, companies can tap into a broader talent pool, including individuals from diverse backgrounds who might otherwise be overlooked. This approach ensures a more inclusive hiring process and promotes greater diversity within the organisation.

5. Reduce unconscious biases and create a more equitable and inclusive process

Naturally, everyone is biased because our brains rely on cognitive shortcuts to process large amounts of information, which can lead to unconscious biases influencing our perceptions and decisions. These biases extend beyond interviewers to candidates themselves, as social desirability bias may cause individuals to answer questions dishonestly in order to present themselves more favourably. Additionally, 46% of jobseekers use ChatGPT to generate resumes and cover letters, so skills-based hiring provides a more accurate and objective overview of a candidate’s abilities.

How to adopt Skills-Based hiring?

Now that you know the benefits of skills-based hiring, let’s look at how you can start implementing this approach in your organisation.

1. Choose your objective assessment method

Your choice of an assessment highly depends on your hiring needs. Here you can read 7 factors to consider when choosing a pre-employment test.

There are often two ways to measure skills during hiring. The most accurate is assessment software, like game-based assessments, which standardizes evaluation and reduces subjectivity. If budget is an issue, situational judgment questions are a good starting point for assessing a candidate’s skills.

2. Start a pilot in a small department or even for a single role

Think big, start small. You don’t have to implement it in the entire company right away. Often this only creates resistance to change and an overwhelming workload. By trying it out on a small scale, you can remove many obstacles before implementing it on a larger scale.

Getting managers on board can be extremely difficult. A good approach is to find the place within the organisation where the most ‘recruitment pains’ are directly felt by the managers and propose your solution there.

3. Identify the needed skills for the role

To guide your search for the ideal candidate, it is important to have a clear idea of what skills and competencies you are looking for in a specific role. For example, you can conduct an internal team analysis to identify the skills of top performers, rather than making assumptions yourself about the necessary skills.

4. Adjust your job descriptions

Adjusting your job descriptions after identifying the needed skills is crucial. It ensures candidates understand specific requirements, leading to a more qualified applicant pool. Also, swapping out degree requirements for skill requirements broadens the applicant pool from the beginning, boosting the chances of creating a diverse team.

5. Place your skills-based assessment at the start of your recruitment process

The placement of a skills-based assessment in your recruitment process is crucial. It is recommended to conduct the assessment pre-screening for several reasons: it provides an objective first impression, maximizes your talent pool, and enhances overall efficiency.

6. Continue focusing on skills for internal development.

When leaders offer employees opportunities for growth and advancement within the company, their retention rates are nearly double that of other companies. Often, the right talent is already within your organisation. By matching employees’ skill sets to open positions, you can enhance your skills-based hiring strategy. Furthermore, you can design talent development plans based on each person’s areas for improvement.

An example of Skills-Based Hiring in an organisation

By prioritising skills over traditional CVs, Randstad increased its talent pool utilisation by 70%, decreased its drop-out rate, enhanced diversity, and achieved a more efficient and inclusive recruitment process.

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