The rise of skills-based hiring: 76% of employers use SBH in recruitment

Degrees and extensive experience no longer hold the sole influence in determining a candidate’s suitability for a role. Now, there’s a paradigm shift, with employers emphasising the acquisition of specific skills that directly align with the demands of the desired positions.

Victoria Egba on June 19, 2023 Average reading time: 4 min
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The rise of skills-based hiring: 76% of employers use SBH in recruitment

Data from Test Gorilla shows that 76% of businesses are using skills-based hiring as their top recruitment strategy. Out of which, 92.5 % of them experienced a reduction in mis-hires and 91.4% reduced their time to hire. Traditional hiring procedures are giving way to candidates who show they are skilled over those with formal education. The shift to skills-based hiring is producing a more dynamic and skilled workforce in sync with the demands of today’s quickly changing corporate world.

The Mindset Shift To SBH

Skills-based hiring (SBH) challenges the conventional approach of relying solely on resumes and educational qualifications. It comes from the mindset shift that education or degree may not be the best determinant of a candidate’s competency. Past experience with even a direct competitor is also not enough to prove that a candidate can perform a job properly. This mindset shift focuses more on outcomes, and how much an employee can succeed in the job rather than credentials. 

Moreover, according to Cedefop, 21% of EU adult workers believe their current skills may become outdated within the next five years. 

In other words, an employee who has the right credentials, and probably worked for a competitor may still not have the skills necessary to excel in their field. With the increasing rise of tech adoption in businesses, focusing on candidates with the right skills could be a smarter move for organisations. 

“I think companies that focus on skills as the currency, companies that shift away from more antiquated signals like only degree, or pedigree, or where someone worked, will help ensure that the right people can be in the right roles, with the right skills, doing the best work”.- LinkedIn CEO Ryan Roslansky

SBH doesn’t entirely eradicate the need for formal education as certain industries like law, health and more, cannot even be practised without those degrees. 

Larger Talent Pool

Skills-based hiring significantly expands an organisation’s talent pool, and this is especially useful because many industries are facing talent shortages. 

 For starters, it increases the likelihood of locating highly skilled candidates who may have obtained their expertise through alternative routes such as vocational training, certifications, or practical experience. 

Inevitably, organizations gain access to talent that they would otherwise overlook based on traditional educational criteria. Employers can promote inclusivity and diversity in their workplace by considering these skill-oriented candidates. The widespread adoption creates a transformative shift in the way candidates are evaluated, allowing qualified individuals from diverse backgrounds to be considered for opportunities they would have been denied.

However, while skills are important in the hiring process, they do not determine a candidate’s suitability for a role. Essential factors like cultural fit, values alignment, teamwork abilities, and data insights should still be considered when hiring.  

Upskilling Current Employees

Based on a survey by Cedefop, at least 27% of employees in Europe are in “dead-end jobs,” where they have higher skills than required for their current roles but have few opportunities for growth and development. Skills-based hiring recognises such employees’ untapped potential and provides a path for their advancement within the organisation. 

The solution employers need for growth may not necessarily be a new hire.

Instead of looking for new talent elsewhere, businesses can invest in training and development initiatives to upskill their current workforce, allowing them to take on more challenging and impactful roles.

Employers can tap into their current employees, upskill necessary talents and promote those who possess the right skills to new positions. Now this creates a win-win for both employers and employees. 

Moreover, employees will likely remain committed and motivated when they can see opportunities for advancement within the company. This means a lower turnover rate, lesser recruitment costs, a positive work environment, increased productivity, and overall company growth.

Implementing Skill Base Hiring 

To introduce skills-based hiring (SBH) into an organisation’s recruitment process, whether as an HR or TA leader, it’s essential to start small and pilot the approach. It begins with understanding the skills needed for growth in the organisation. As the use of skills-based hiring with the search for the wrong skill set will produce futile results. 

It’s also essential for employers to systematically evaluate the impact of SBH on their hiring processes. For each hire, evaluate the quality of candidates selected, time-to-hire, and overall job performance. 

To do this, recruiters can begin with short-term hires or temporary positions to test the waters before moving to full-time hires. The organisation collects data and insights during this pilot phase, which will serve as tangible evidence, reinforcing the advantages of SBH and helping to overcome any scepticism.

Through a controlled pilot program, organisations can experiment with different methodologies, assessment tools, and evaluation criteria to identify the most effective approach for their specific hiring needs. Recruiters can also use platforms like Giant to get sufficient recruitment data from the onset to ease up the hiring process. 

Furthermore, starting small and piloting SBH provides an opportunity for organisations to gather feedback from stakeholders involved in the hiring process, including recruiters, hiring managers, and candidates. 

Push-backs from Organisations

Despite the benefits of SBH, some companies resist its adoption. A major reason is the comfort formal education offers and the pride of having employees with good degrees. For instance, certain employers would love to brag that their employees are all graduates of top universities like Oxford,  have Phd. or multiple degrees. Moreover, they may have a preference for hiring individuals from the same educational institutions or with similar backgrounds. Some employers also prefer to continue the traditional process they are already accustomed to, rather than testing the waters with candidates who may not possess a formal education.

SBH recognizes that grades alone do not accurately reflect a person’s value or potential, especially considering that some of the knowledge acquired during a degree program may become outdated by graduation. 

While certain jobs may require specific qualifications, the majority of roles do not necessarily need a formal degree for successful performance. TA leaders or recruiters may have to prove its effectiveness to certain organisations before it becomes more generally accepted. 

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