Written by Lindsey Burke, Principal Consultant and Dan Hughes, Senior Director of R&D
If you work in the world of Talent Management, then you likely have heard the term skills-based hiring or are already using skills-based hiring practices. Research indicates over 70% of organizations have implemented skills-based hiring practices with 27% of them having adopted the practice in the last 12 months. Furthermore, Ventana Research predicts that by 2028 “demonstrable, transferrable skills will overtake prior job titles and education as leading qualifiers in the hiring and promotion processes for one-half of organizations.” So, what is skills-based hiring, how can it help improve DEI within organizations, and what are best practices for implementing skills-based hiring practices?
What is skills-based hiring?
Skills-based hiring is the practice of hiring for skills over formal qualifications, such as education or previous job experience. Skills-based hiring practices seek to uncover the knowledge, skills, abilities, and other characteristics (KSAOs) necessary in order to perform a job successfully and bases talent practices off those corresponding KSAOs.
When considering important skills for a role, they can be broadly grouped into two main areas:
- Job-specific skills – These are specialized areas of knowledge and expertise related to performing functional tasks effectively. Examples of broad technical skills categories would be coding, graphic design, digital marketing, statistical analysis, or accounting. They are often learned through specific training and on-the-job practice.
- Transferrable skills – These are skills which are important for successful performance across many roles, in terms of being personally productive and working effectively with others. Examples are time management, empathy, giving feedback, or stress tolerance. They are primarily influenced by an individual’s personality, ability, motivation, and values, and often are developed through work and life experience rather than specific training.
Both technical skills and behavioral skills are important for roles, and a comprehensive skills profile should include these two elements. However, with job-specific skills expected to change in many roles due to technology advancements, transferrable skills are particularly important for organizations to ensure future-ready hiring practices and internal mobility strategies.
How can skills-based hiring practices improve DEI within my organization?
There are many great strategies to employ when it comes to prioritizing Diversity, Equity, and Inclusion goals, and using a skills-based hiring approach is one that can provide benefits such as:
- Casting a wider net in an organization’s candidate pool when using skills-based hiring, particularly to underrepresented groups who do not have access to traditional career pathways (e.g., degrees).
- Focusing on the most critical KSAOs allows organizations to reduce bias within their hiring practices or rely less on practices that may traditionally favor candidates from certain backgrounds or particular educational accomplishments. It ensures the hiring process is focused on the key characteristics that define whether someone can successfully perform in the role rather than potentially irrelevant factors.
- Identifying skill gaps which then can be addressed through training and development, upskilling those who most need it.
What are the best practices for implementing skills-based hiring?
Experts agree that in order to successfully implement a hiring strategy centered on a candidate’s specific skills, there are a few steps that need to be taken in advance which include:
- Implement a strong communication strategy; know your whys and articulate your outcomes thoroughly. Leadership should also be a part of this process, and it is necessary to gain their buy-in from the beginning.
- Have a solid skills vocabulary and job architecture in place. Having a framework to understand not only the different roles and levels within your organization, but also how they are different from one another in terms of skills required for success is crucial. This work is time consuming, but necessary for a successful skills-based hiring practice.
- Scale skills-based practices with the help of technology and AI. Some organizations are leveraging automated resume screening and virtual interviews using natural language processing to find needed skills. Others have chatbots to engage with candidates during the hiring process and answer questions. However, this does not remove the responsibility of talent professionals to monitor AI practices and ensure fair and ethical processes are being carried out.
In an environment where organizations need to differentiate themselves to attract the best talent, employing a skills-based hiring approach may be one way to stand out from the pack. By focusing on skills, companies can simultaneously reach more candidates, minimize talent gaps, and enhance DEI initiatives.
