This shift has gained significant traction, particularly in the wake of The Great Resignation, where organisations have grappled with significant talent shortages amidst tightening budgets. And it’s coincided with another important shift: the recognition that in a skills shortage, the traditional CV doesn’t always give you the best view of an individual’s capabilities.
The Harvard Business Review recently analysed more than 51 million job descriptions posted between 2017 and 2020. In this period alone, employers reduced degree requirements for 46% of middle-skill positions and 31% of high-skill positions. Among the jobs most affected were those in IT and managerial occupations, which were hard to fill during that period. This example underscores the rapid growth of skills-based recruiting in building high-performing teams – and it’s my predication this approach will change the way we think about building workforces forever.
Thinking about what brought us to this point, my mind casts back to the early 2000s, when the labour market witnessed a phenomenon known as ‘degree inflation’, characterised by an undue emphasis on formal qualifications in the recruitment process. Organisations at that time relied heavily on academic credentials, particularly degrees, to make hiring decisions. Fast-forward to today however, and many organisations are grappling with ‘over-education’. People with the right qualifications, but not the practical skills to deliver against increasingly digitised roles.
Skills-based hiring is on the rise and represents a paradigm shift where companies prioritise a candidate's skills and capabilities over their educational background and credentials.
Instead of exclusively focusing on qualifications, HR teams hire people based on their skills, honed through certifications or micro-credentialling, work experience and practical knowledge. The focus shifts from what candidates studied and where they studied, to what they can bring to the table in terms of new skills and contributions.
Many organisations have shared their success in enabling this skills-led approach. For example, major tech companies including LinkedIn (where I worked for many years), as well as Google and Apple have moved away from traditional degree requirements in favour of skills assessments and practical evaluations. These industry leaders have seen improved diversity, innovation, and overall performance by focusing on skills over education or previous job credentials.
For recruiters, the shift to a skills-based approach to hiring requires buy-in across all levels. It represents a different way of recruiting – a disruption to BAU – so a thoughtfully considered plan is important. One effective way to implement this approach is by incorporating an initial skills assessment at the outset of the candidate screening process.
These assessments provide an unbiased evaluation of both interpersonal and technical skills, encompassing communication proficiency, aptitude, learning preference, leadership capabilities and emotional intelligence. Additionally, work sample tests (which WithYouWithMe calls Capstones), which simulate real-world job tasks, allow recruiters to assess technical skills accurately, transcending the limitations of a traditional CV.
Hiring people based on skills and abilities offers a multitude of advantages over traditional hiring methods. Some of the key benefits include:
Like any strategic initiative, it’s a two-sided coin. While the advantages of skills-based hiring are compelling, there are some challenges to consider. Transitioning to this hiring strategy may present operational complexities, concerns about the reliability of skills tests, budget considerations, and time management issues, especially when handling a higher volume of applications.
For example, a recent report found that 38.2% of hiring managers worry that incorporating skills assessments may slow down the recruitment process. However, 55% of surveyed candidates claim that skills-based hiring has expanded their career opportunities. The key to overcoming these obstacles lies in recognising that skills-based hiring isn't an additional step but a replacement for the outdated resume-based screening process.
Before making a business case for a new approach, it’s important to obtain data that supports your recommendation – and there’s a wealth of industry research available that points to why skills-based employment is critical in modern workforces.
Leading organisations around the world are embracing skills-based hiring, prioritising skills and practical experience over formal qualifications. From my point of view, one of the most exciting examples is the GED Tech Apprenticeship Program.
Under the GED Tech Apprenticeship program, every student who goes through the GED Testing Service – around 700,000 each year – will have the opportunity to access free accredited training to upskill in high demand areas and have their skills matched to roles at leading companies in the United States. The fact that this massive and iconic institution is advocating for skills-based employment demonstrates just how prolific this trend is.
If you’re curious to learn more or discuss how skills-based employment may work for your organisation, please get in touch.
