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What Is Skills-Based Hiring?

Businesses face growing skills shortages. Worker demands and preferences have changed. Technology is evolving ever more rapidly, as is the nature of work. 

Nearly 83% of human resources leaders say they struggle to find enough talent with the necessary skills (Gartner)

All of this has rendered traditional methods of recruiting talent insufficient. 

There is also a growing realization that focusing on degrees and experience, rather than whether someone can actually do the job, makes for a smaller talent pool – and an uneven playing field. It’s clear that hiring for skills (and potential) would be a fairer, and more efficient and effective, way to approach recruitment in 2024. 

Skills-based hiring is a recruitment approach that focuses on the specific skills and competencies required for a particular role, and then assessing and prioritizing candidates on this basis, rather than ‘traditional’ factors like where someone studied, or previous job titles.

skills vs experience

Of course, this is all well and good in theory, but how do you put it into practice? Luckily, the same “technological development” that has transformed job titles and widened skills gaps has also provided much of the answer to perfecting skills-based hiring at scale. 

The importance of skills

Rather than looking at criteria such as education, experience or tenure, skills-based hiring looks at a candidate’s actual and potential capabilities, based on the skills they have, are likely to have – or could pick up. This means better, fairer hires – as long as you can work out what skills everyone has, and what skills you truly need. 

In 2023, more than 45% of employers on LinkedIn explicitly used skills data to fill their roles (12% more than the previous year)

Clearly, in such a world, skills become an important currency. Indeed, companies embracing skills-based hiring – and skills-based transformation in their talent management at large – look to make “skills” the atomic unit of measurement, underpinning every candidate (or employee) profile, and every role description (or learning opportunity) at their organization. 

This requires a new way of collecting, enhancing and maintaining talent data. You must consider if the data management process you have at the moment allows for completeness, accuracy, and richness – on an ongoing basis.

Because without the right data powering every part of the recruitment process – from attraction and nurture to selection and recruitment – skills-based hiring won’t yield the results you want. 

Achieving complete “skills intelligence” 

Talent data needs to be held in one place – the skills of your employees alongside the skills of your silver medallists, previous applicants, alumni, and proactively sourced candidates, as well as that of members of your talent community. If these all exist separately, all you need is a great tech partner to join them together.    

Once you have your connected data, from across your HR tech ecosystem, you will need to assess if there are missing fields. Luckily, there are ways to enrich datasets like these – AI is your friend here. 

Indeed, smart explainable AI (we recommend AI that has been audited, to help reduce bias rather than potentially exacerbate it) can infer the skills someone may have but inadvertently left off their CV – or skills someone could learn. Bringing “adjacent skills” into your selection process will give you a rich pool of talent to fish from. 

Going beyond talent data

Understanding talent at the level of skills is a crucial pillar of skills-based hiring – but this approach also requires a rethink about how we define work and jobs. When looking at role descriptions, break down the work into constituent tasks, identifying the skills needed to complete those tasks.

Again, smart AI can help here – there is no real way to do this manually if you are a large, ever-changing enterprise company. A (dynamic and contextual) Job Architecture will keep you right. 

From here, you can connect the dots: establish who in your talent universe is best equipped to provide the skills you need for each role, starting with the most essential. 

You may even be able to embed external labor market insights, to help you see not only who has the skills you need, but how much they would cost in different markets, how your competitors are prioritizing certain skills, and where you will find the highest concentration of sought-after skillsets. 

Taken all together, this Skills Intelligence is the key ingredient that makes skills-based hiring possible.

The cultural shift 

Investing in technology, and deploying data in a new way, is crucial to getting skills-based hiring right – particularly at large companies. But there are also changes to the way people think and work, inside TA and outside TA, that are key to the success of this approach. 

With skills-based approaches to hiring, interviewers would ask applicants to explain how they might demonstrate a particular skill. TA teams and Hiring Managers alike will need to align on the ideal way to tease out the demonstration of a particular skill, the right questions to ask, and using the most objective assessment methods they can. 

92% of companies view skills-based hiring as more effective than using a traditional CV (Fortune) 

Of course, the skills-based approach is nothing without discussion of skill development. The fact that skills change, that people learn and grow, is not just something to accommodate within your data management strategy.

Encourage learning. Provide opportunities for professional development and upskilling to keep employees engaged (and productive), and build a culture that truly values skills. Ensure People Managers have the right insights to understand the needs of their team... and can match people to the relevant training or mentor.  

With a dynamic understanding of the skills you have and need, you open the door to better workforce and succession planning, to creating better L&D programs and giving fairer performance assessments, and aiding employees in making those all-important lateral moves.

The investment in skills-based hiring pays dividends: you close skills gaps today, keep people inside the company, maximize productivity, and unlock the potential of your entire workforce, with limited wastage.

“The future is really putting them into a cauldron of skills matching and then picking the best and the brightest with a skills-based approach that really does help reduce any sort of bias to be your standard of how you recruit and grow your talent within the organization.” – Elin Thomasian, UKG

Embracing skills-first hiring is smart, because it not only addresses the challenge of skills shortages today, but also positions your business to thrive in a rapidly changing environment... and meet your goals tomorrow. 

Discover how Beamery supports skills-based hiring, whatever stage your organization is at.