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Skills-first hiring: the new frontier in talent acquisition

Skills-first hiring is revolutionizing talent acquisition, focusing on practical abilities over degrees, promoting diversity, and enhancing organizational success.

September 29, 2020
Yuma Heymans
December 13, 2023

In the shifting sands of the talent acquisition landscape, a significant trend is emerging: skills-first hiring.

This approach prioritizes candidates' skills and competencies over their academic background or previous job titles, focusing on practical abilities and job performance.

Let's delve into this transformative trend, exploring its origins, benefits, challenges, and the future outlook, painting a comprehensive picture of skills-first hiring in today's job market.

The Emergence of Skills-First Hiring

The journey towards skills-first hiring began in the 2000s, a time marked by the phenomenon of "degree inflation". Employers increasingly added degree requirements to job roles that previously didn't necessitate them, particularly during the Great Recession of 2008-2009.

However, a critical shift occurred as companies, government, and community organizations recognized the need for a reset. Education and degree-based requirements in hiring took a backseat, paving the way for skills-based hiring. This approach focuses on recruiting individuals who meet specific skill or competency requirements, encompassing cognitive, technical, physical, or soft skills, depending on the job's role​.

The Benefits of Skills-First Hiring

  • Addressing skill gaps: A staggering 87% of professionals acknowledge skill gaps in their companies, yet only one-third are prepared to handle workforce disruptions caused by technological and market trends​
  • Efficient candidate screening: About 64% of companies agree that skills testing leads to faster candidate screening, though only 40% have invested in screening tools for managing large applicant volumes​
  • Use of pre-employment assessments: Pre-employment assessments have become popular, with 82% of companies using some form of pre-employment assessment test. Recruiting managers using these assessments report 36% higher satisfaction with their final hiring decisions​
  • Reduced turnover: Companies employing pre-employment skills assessments report a 39% lower turnover, underscoring the effectiveness of skills-first hiring in employee retention​​.
  • Improved diversity and revenue growth: An Accenture study highlights a direct correlation between skills-first hiring and organizational success. Companies adopting this recruitment practice witness a 1-2% increase in revenue for every 10% increase in intersectional gender equity​

Challenges and Trends

Despite the benefits, skills-first hiring faces challenges. About 75% of HR professionals have struggled with recruiting in the past 12 months due to skill gaps​​, and 94% of HR decision-makers find it difficult to locate qualified candidates, impacting business growth​.

However, prominent companies like Apple, IBM, Google, Nordstrom, and Bank of America are leading the charge, removing bachelor’s degree requirements from many job positions​.

This shift is significant considering that 60% of American workers over 25 years do not possess a four-year college degree​​.

As we move into 2024, with diversity, equity, and inclusion initiatives taking center stage, a skills-based approach is increasingly favored. This shift could encourage more highly skilled and qualified candidates, including those with self-taught skills or skills not related to their college degrees, to apply. Early adopters of this approach in 2023 observed significant returns in key performance indicators like reduced time to fill open positions, cost per hire, and increased diversity​​.

Skills-first hiring is more than a trend; it's a paradigm shift in talent acquisition. By focusing on practical abilities and competencies, organizations can harness a more diverse and capable workforce, driving innovation and growth. As we embrace this new era, the recruitment landscape is poised for a transformative journey, one where skills and competencies reign supreme.

An approach to skills-first hiring

Implementing skills-first hiring can be effectively structured into three main stages. Each stage consists of several steps, designed to guide organizations in adopting this approach in a systematic and effective manner.

Stage 1: Preparation and Planning

The Preparation and Planning stage lays the groundwork for a skills-first hiring approach. It starts with a thorough analysis of the job role to identify essential skills and competencies, encompassing both hard and soft skills. Engaging with current employees in similar roles provides valuable insights. This stage also involves revising job descriptions to focus on skills and competencies, moving away from traditional emphasis on degrees and previous job titles. Clear outlining of tasks and responsibilities associated with the role is crucial. Additionally, this stage includes developing fair, unbiased, and job-relevant skills assessment criteria, which forms the basis for the subsequent stages of hiring.

Identify Essential Skills and Competencies:

  1. Analyze the job role to pinpoint specific skills needed.
  2. Include both hard (technical) and soft (interpersonal) skills.
  3. Engage with current employees in similar roles for insights.

Revise Job Descriptions:

  1. Focus on skills and competencies in the language of the job description.
  2. Avoid emphasizing degrees and previous job titles.
  3. Clearly outline the tasks and responsibilities associated with the role.

Develop Skills Assessment Criteria:

  1. Decide on assessment methods (e.g., practical tasks, simulations, problem-solving exercises).
  2. Ensure these assessments are fair, unbiased, and relevant to the job.

Stage 2: Implementation

The Implementation stage is where the skills-first approach is actively put into practice. Training the recruitment team is a key step here, ensuring they understand the importance of this approach and are skilled in unbiased skill assessment techniques. This stage includes conducting skills-based interviews with behavioral, situational, and practical components. Leveraging technology, such as Applicant Tracking Systems (ATS) with skills-focused algorithms and AI for skill-matching, enhances the efficiency and effectiveness of this stage. It’s a phase of active engagement where the theoretical groundwork of Stage 1 is translated into tangible hiring practices.

Train Recruitment Team:

  1. Educate your team on the importance and methods of skills-first hiring.
  2. Focus on unbiased skill assessment techniques.
  3. Train them to recognize a diverse range of talents and backgrounds.

Conduct Skills-Based Interviews:

  1. Use behavioral and situational questions to assess skills.
  2. Incorporate practical tasks or problem-solving scenarios.

Leverage Technology:

  1. Utilize Applicant Tracking Systems (ATS) with skills-focused algorithms.
  2. Implement AI and data analytics for skill-matching and efficiency.

Stage 3: Evaluation and Refinement

In the Evaluation and Refinement stage, the focus is on measuring the outcomes of the skills-first approach and making necessary adjustments. Tracking key metrics like quality of hire, employee performance, and retention rates helps in understanding the impact of this approach. Assessing the diversity and inclusivity of the hiring process is also vital. This stage involves gathering feedback from candidates, new hires, and hiring managers to identify areas for improvement. Continuous updating and adaptation to evolving industry skills and updating skills criteria and assessment methods ensure the approach remains relevant and effective.

Measure Outcomes:

  1. Track metrics such as quality of hire, employee performance, and retention rates.
  2. Assess the diversity and inclusivity of your hiring process.

Gather Feedback:

  1. Collect input from candidates, new hires, and hiring managers.
  2. Use this feedback to refine your skills-first hiring process.

Continuously Update and Adapt:

  1. Stay informed about evolving industry skills.
  2. Regularly update your skills criteria and assessment methods.

By following these stages and underlying steps, organizations can effectively implement a skills-first hiring approach, leading to a more competent, diverse, and adaptable workforce.

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