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In today's rapidly evolving job market, traditional hiring practices often fall short of identifying a candidate’s true potential.
As employers strive for innovation and inclusivity, a shift towards skills-based hiring is gaining momentum.
This emerging approach prioritizes a candidate's abilities, competencies and potential over their formal education or previous roles.
We’ll explore skills-based hiring, including its benefits for employers and job seekers and how it is reshaping the future of recruitment in our dynamic global economy.
What is skills-based hiring?
Skills-based hiring is a recruitment strategy that focuses on assessing and prioritizing candidates based on their professional skills and capabilities rather than formal qualifications such as credentials or years of experience.
This approach aims to provide a more accurate measure of a candidate's potential to succeed in a role.
It allows employers to find the best fit for their team based on demonstrated abilities rather than relying solely on traditional, credential-centric markers of success.
In skills-based hiring, employers identify the hard skills and soft skills required for a particular role, evaluating candidates based on their proficiency in those areas through methods such as assessments, simulations or work samples.
Skills-based hiring allows organizations to tap into a vast pool of hidden talent, ultimately building stronger, more resilient teams that are better equipped to thrive in today's rapidly changing business landscape.
Advantages of skills-based hiring
Explore some of the key benefits of skills-based hiring for both employers and employees to learn how this approach broadens the talent pool and increases opportunities for job seekers.
How skills-based hiring benefits job seekers
Increased job opportunities
Skills-based hiring opens doors for candidates who may have non-traditional career paths or unconventional backgrounds.
According to a report from The Burning Glass Institute, The Emerging Degree Reset, the shift toward skills-based hiring could expand opportunities for Americans without a college degree, nearly two-thirds of the labor force as of 2024.
Based on these trends, we project that an additional 1.4 million jobs could open to workers without college degrees over the next five years.The Burning Glass Institute
Employers focused on skills-based hiring are often more likely to consider candidates with transferable skills and diverse experiences, leading to a broader talent pool and increased opportunities for job seekers.
Streamlined application process
Skills-based hiring often involves streamlined application processes, with less emphasis on the traditional resume education section or extensive work history.
This makes it easier for job seekers to apply for new roles by focusing on concisely presenting their relevant skills and experiences.
In fact, a 2023 TestGorilla survey found that 56% of employees say they prefer hiring processes that include skills-based assessments.
We recommend that job seekers explore how to write a resume to learn how to convey their skills and qualifications effectively.
Reduced employer bias
Skills-based hiring helps reduce bias in the recruitment process by focusing on objective criteria such as skills and competencies.
In 2020, the White House issued an executive order detailing plans to improve the federal hiring process by incorporating skills-based assessments and reducing reliance on traditional qualifications such as degree requirements.
The executive order notes, “Modernizing our country’s processes for identifying and hiring talent will provide America a more inclusive and demand-driven labor force.”
Ultimately, when candidates are evaluated based on their abilities rather than traditional factors such as education credentials, it leads to more well-rounded and equitable hiring decisions.
Improved job satisfaction
Through skills-based hiring, job seekers are often more likely to find roles that align with their skills and career goals.
This leads to better job fit and satisfaction, as candidates are matched with positions where they can contribute effectively and thrive professionally.
According to the U.S. Chamber of Commerce, “68% of U.S. workers say earning credential(s) outside traditional education degrees has helped them progress in their careers.”
We recommend that job seekers see how to create a strong resume work history section for tips on how to describe relevant skills developed in past roles.
MyPerfectResume’s Resume Builder can help job seekers build a standout resume with ready-made content from Certified Resume Writers such as bullet points about job-relevant skills and work experience.
Increased internal mobility
Many businesses that use skills-based hiring also encourage employees to pursue opportunities for upskilling and reskilling to align their skills with the evolving needs of the organization.
This can involve participating in training programs, attending workshops or pursuing certifications to develop new skills or enhance existing ones.
In a conversation between McKinsey & Company partners Bryan Hancock and Brooke Weddle on the McKinsey Talks Talent podcast, Hancock notes:
If you have more of a skills-based approach to creating those talent marketplaces, you can find talent where you might not have previously looked for roles in your own organization. This helps the company, and it also helps talent who want to have this more flexible approach to career development.Bryan Hancock, McKinsey & Company
Skills-based hiring can increase internal mobility by fostering an environment where employees are hired, promoted and transferred based on their competencies rather than solely on tenure or job titles.
How skills-based hiring benefits employers
Reduced time-to-hire
Skills-based hiring can help employers identify candidates who may not have followed a traditional career path but have gained relevant skills in other ways.
This can expand the pool of potential candidates and reduce the time it takes to fill a role.
According to a recent TestGorilla Survey — The State Of Skills-Based Hiring 2023 — 82% of organizations reduced time-to-hire by adopting skills-based hiring methods.
With a skills-based approach, employers can use assessments, tests or other tools to quickly evaluate a candidate's abilities, allowing them to move more quickly through the hiring process.
Lowered recruitment costs
Skills-based hiring allows employers to internally identify and assess candidates based on their skills, reducing the need to rely on external recruitment agencies and their associated fees.
By focusing on skills, employers can also develop a more efficient applicant screening process.
For instance, they can save time and resources by using automated tools or assessments to evaluate candidates' skills rather than traditional methods such as extensive interviewing.
Fewer mis-hires
When employers implement skills-based hiring practices, they can more accurately assess whether a candidate has the required skills to perform the job by focusing on competencies.
This reduces the likelihood of hiring someone who may have a great resume but ultimately lacks the necessary skills to succeed in the role.
TestGorilla’s The State of Skills-Based Hiring 2023 survey found that 88% of employers reduced mis-hires by incorporating skill assessments into their hiring processes.
Increased employee retention
Skills-based hiring focuses on skills and competencies, aiming to match candidates with roles that align with their strengths and interests.
The U.S. Chamber of Commerce reports that “95% of executives and HR professionals say individuals with only credentials earned outside of traditional pathways perform the same or better than individuals with only traditional degrees.”
When employees are in positions that capitalize on their skills, they are often more likely to feel fulfilled, engaged and satisfied in their work, increasing the likelihood that they will stay with the organization and continue to grow in their roles.
This is evidenced in TestGorilla’s The State of Skills-Based Hiring survey, which found that organizations using skills-based hiring saw an 89% increase in employee retention.
Improved diversity and inclusivity
Shifting the focus from credentials to capabilities allows organizations to break down barriers that have historically limited opportunities for underrepresented groups, such as college degree requirements.
Steelcase, a leading manufacturer and distributor of workplace furniture, adopted a skills-based hiring approach in 2022 as a part of its diversity, equity and inclusion (DEI) strategy.
The Every Child Thrives Foundation conducted a case study on Steelcase’s DEI initiative, reporting: “These efforts resulted in a recent cohort of new hires that include 55% women (up 2% from last year) and 30% racial or ethnic minorities.”
The Economic Policy Institute reports that nearly two-thirds of people in the labor force do not have a college degree.
Skills-based hiring practices often include removing degree requirements entirely, which opens opportunities for job seekers with wide-ranging educational and professional backgrounds.
Industries leading in skills-based hiring
Several industries have been at the forefront of adopting skills-based hiring practices, driven by the evolving nature of work, advancements in technology and changing talent demands.
Technology
Given the rapid pace of innovation and the constantly evolving nature of technology, companies in this sector have a strong incentive to prioritize candidates' skills and abilities over traditional qualifications like degrees or credentials.
According to TestGorilla, “Tech companies are at the forefront of the shift to skills-based hiring, focusing on skills assessments for hard skills like computer programming and soft skills like critical thinking.”
This trend holds true for remote, hybrid and in-person roles. TestGorilla’s recent survey, The State of Skills-Based Hiring 2023, found that 64% of remote companies use skills-based hiring, followed by 78% of hybrid companies and 57% of in-person companies.
Health care
In the health care industry, skills-based hiring is essential for identifying candidates with the clinical expertise and specialized skills needed to provide high-quality patient care.
The Covid-19 pandemic dramatically increased the demand for skilled health care workers such as Critical/Intensive Care Nurses and Registered Nurses.
A report from The Burning Glass Institute found that Registered Nurse job listings specifically requiring bachelor’s degrees declined by 5% compared to 2019.
Intensive/Critical Care Nurse job listings requiring bachelor’s degrees decreased from 35% in 2019 to 23% in 2020.
Manufacturing
Manufacturing and engineering sectors strongly emphasize skills-based hiring to meet the demands of advanced manufacturing processes and technological innovation.
Employers in these industries seek candidates with specialized technical skills and often utilize skills assessments and hands-on evaluations to assess candidates' capabilities.
As discussed by McKinsey & Company partner Bryan Hancock on the McKinsey Talks Talent podcast, one manufacturing company that implements skills-based practices is Boeing.
In the past, Boeing often filled cybersecurity roles with college graduates in computer science programs. While a computer science degree offered theoretical understanding, it did not prove helpful for the day-to-day tasks required on the job.
To remedy this issue, Boeing developed a cybersecurity apprenticeship program to teach specific cybersecurity skills used on the job without requiring a four-year degree.
Companies committed to skills-based hiring
Skills-based hiring has gained popularity among companies of all sizes and various industries. Explore a few of the top companies that are committed to skills-based hiring practices.
Google is known for its rigorous interview process that often focuses on assessing candidates' problem-solving skills and technical abilities more than their academic credentials.
The Google hiring page notes, “Before moving into interviews, you may be required to take the Google Hiring Assessment, designed to measure workstyle skills required for success in a role at Google.”
One route job seekers can take to develop job-specific skills is through Grow with Google, an initiative launched by Google to help people acquire the skills they need to thrive in the digital economy.
Grow with Google provides online courses, workshops and events covering digital marketing, coding, data analysis, entrepreneurship and more.
IBM
IBM implemented skills-based hiring to fill positions in emerging fields like artificial intelligence, cloud computing and cybersecurity.
Former Senior Vice President of Transformation and Culture at IBM, Obed Louissant, told Katelin Holloway of Lattice’s All Hands podcast:
As we got the results and started to gain more and more applicants by removing the degree and then the diversity of the applicants increased. And then after we hired, the performance overall was increasing, the diversity was increasing, the retention was getting better, we said, hey, there's something here.Obed Louissant, former SVP of transformation and culture at IBM
IBM uses online assessments to determine if a candidate is the right fit. Their hiring page notes, “This stage in the process allows you to truly demonstrate who you are and what value you can bring to the role.”
Pay close attention to the required skills and competencies listed in the job description of your target role. This will give you an idea of what to expect in the online assessment.
Microsoft
Microsoft emphasizes skills-based hiring through programs like the Microsoft Leap Apprenticeship Program, which provides on-the-job training to candidates without traditional degrees.
In 2020, Microsoft launched its Skills Initiative program, designed to empower individuals with the knowledge and capabilities they need to succeed in today's technology-driven world.
One of the central components of the initiative is the Microsoft Learn platform, which offers a wide range of online courses, tutorials and certifications covering topics such as cloud computing, data science, artificial intelligence and software development.
Adapting to skills-based hiring as a job seeker
Get insight on how to adapt to the rise of skills-based hiring as a job seeker. See our job interview guide for additional tips and tricks from career advice professionals.
Build a skills-based resume
Your resume should emphasize your proficiency in key skills relevant to the role you’re applying for, providing quantifiable achievements to demonstrate your capabilities whenever possible.
A sampling of 25 thousand resumes created on MyPerfectResume in 2023 identified the top ten most frequently used skills on job seekers’ resumes:
- Time management
- Customer service
- Critical thinking
- Active listening
- Attention to detail
- Verbal and written communication
- Teamwork and collaboration
- Microsoft Office
- Problem-solving
- Project management
When applicable, incorporate these skills into your resume to stand out to hiring managers. Include a mix of hard skills and soft skills to demonstrate your full skill set. See our skills-based resume guide for additional tips from career experts.
Additionally, there were the most frequently listed hard skills on the 2023 resumes sampled from MyPerfectResume:
- Project management
- Microsoft Excel
- Python
- SQL
- Javascript
- C
- HTML
- Java
- CSS
Use a resume format that highlights your key skills at the top of the resume, followed by specific examples of how you've applied those skills in previous roles.
Prepare for skills assessments
Be prepared to participate in skills assessments or practical evaluations as part of the hiring process.
Practice coding challenges, problem-solving exercises or other relevant assessments to ensure you're ready to demonstrate your abilities effectively.
Network and seek referrals
Leverage your professional network and connections to uncover opportunities and seek referrals from individuals who can vouch for your skills and capabilities.
Attend industry events, engage with potential employers on networking platforms such as Bold.pro and join professional associations.
Demonstrate continuous learning
Pursuing relevant certifications, completing online courses, or participating in workshops and training programs showcases your commitment to continuous learning and skill development.
Highlight these achievements on your resume and during interviews to demonstrate your proactive approach to personal and professional growth.
Practice skills-based interview questions
Prepare thoroughly for interviews by researching the company, understanding its culture and values and anticipating questions related to your skills and experiences.
Implementing skills-based hiring as an employer
Skills-based hiring holds the promise of unlocking a diverse talent pool, allowing organizations to build dynamic teams that bring fresh perspectives and drive innovation. Explore expert tips on how to adopt skills-based hiring practices.
Develop skill-based job descriptions
Begin by identifying the essential skills and competencies required for each role within the organization.
Collaborate with hiring managers, team leaders and subject matter experts to create a comprehensive list of technical skills, soft skills and other attributes necessary for success in each position.
Craft job descriptions that clearly outline the specific skills and qualifications required for the role.
Emphasize the importance of skills over credentials or years of experience to attract a diverse pool of candidates.
Retrain hiring team members
Review and revise recruitment processes to prioritize skills assessment at every stage. Incorporate skills-based questions and assessments into job applications, screening interviews and technical evaluations to ensure candidates' abilities are thoroughly evaluated.
Provide training and guidance to hiring managers, recruiters and interviewers on conducting skills-based interviews and evaluations.
Educate them on the importance of focusing on candidates' abilities and competencies rather than relying solely on education credentials or traditional markers of success.
Utilize skills assessments
Implement skills assessments or simulations to evaluate candidates' proficiency in key skills relevant to the role.
These assessments may include coding challenges, problem-solving exercises, role-playing scenarios or practical tasks that simulate real-world job responsibilities.
Leverage technology
Explore technology solutions, such as applicant tracking systems (ATS) with built-in skills assessment capabilities or specialized skills assessment platforms, to streamline the skills evaluation process and enhance candidate screening and selection efficiency.
The White House’s Executive Order on Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates notes that hiring managers can shift the criteria they provide ATS systems to avoid disqualifying qualified candidates simply because they do not have a four-year degree.
The executive order includes the following guidance: “Expanding the talent pool will require revisiting the relevance of such filters and recalibrating them so as to eliminate those that act to exclude qualified, non-degreed candidates for reasons other than educational attainment level.”
We recommend that job seekers explore our guide on how to make an ATS-friendly resume for tips on passing automated screening and impressing hiring managers.
Promote internal mobility
Encourage internal mobility by identifying and developing existing employees' skills to match evolving job requirements.
Create pathways for career progression and provide opportunities for upskilling and reskilling to ensure employees remain competitive and adaptable.
Key takeaways
- Skills-based hiring is a recruitment approach that focuses on assessing candidates based on their specific skills and competencies rather than primarily on their academic qualifications or previous job titles.
- This approach can help reduce bias in the hiring process by focusing on objective criteria rather than subjective factors such as educational background or personal characteristics.
- Skills-based hiring benefits employers and candidates by enabling better alignment between job requirements and candidate capabilities, facilitating more efficient hiring decisions, and promoting diversity and inclusion in the workforce.
FAQ
What is the difference between skills-based hiring and traditional hiring?
Skills-based hiring focuses primarily on assessing candidates based on their specific skills, competencies and experiences relevant to the role.
In contrast, traditional hiring often emphasizes factors such as education, employment history and subjective traits such as personality fit.
Skills-based hiring is often more adaptable to changing job requirements and industry trends. Employers can focus on acquiring the specific skills they need for a role, allowing for a more dynamic workforce.
What are the benefits of a skills-based organization?
A skills-based organization is often better equipped to navigate challenges, drive innovation and achieve sustainable growth. Here are some of the key benefits:
- Efficient resource allocation: By focusing on employees’ skills, the organization can strategically allocate resources, ensuring that individuals with the most relevant expertise handle each task or project.
- Enhanced employee engagement: When employees feel valued and motivated, their skills are recognized and utilized effectively. This can lead to higher levels of engagement, job satisfaction, and retention.
- Reduced training costs: A skills-based organization minimizes the need for extensive training programs by hiring individuals with relevant skills and providing targeted development opportunities to enhance those skills further.
A reputation for valuing skills attracts top talent to the organization. Additionally, employees are more likely to stay with a company that invests in their skill development and provides growth opportunities.
What are the most in-demand skills for employees today?
In-demand skills for job seekers can vary depending on industry trends, technological advancements and evolving job roles.
However, some high-income skills have been consistently sought after across various sectors. Here are some of the most in-demand skills:
- Digital literacy: Proficiency in using digital tools, software and platforms is crucial across nearly all industries. This includes basic computer skills, familiarity with productivity software (like Microsoft Office or Google Workspace), and proficiency in using industry-specific software and tools.
- Critical thinking and problem-solving: Employers highly value individuals who can critically analyze situations and devise practical solutions to complex problems. This skill involves logical reasoning, creativity and the ability to approach challenges with a solution-oriented mindset.
- Communication skills: Strong communication skills, both verbal and written, are essential for effective collaboration, customer service, and leadership. The ability to convey ideas clearly, listen actively and tailor communication to different audiences is highly valued.
Continuously developing and refining these skills can help job seekers remain competitive and adaptable in a rapidly changing job market.
What is a skills-based job description?
A skills-based job description focuses on the specific skills and qualifications required to perform a job effectively rather than solely emphasizing factors such as educational background, years of experience or job titles.
This can include soft skills, technical skills and specialized knowledge relevant to the role. Some skills-based job descriptions provide examples or indicators of what proficiency in certain skills looks like, helping candidates understand the level of expertise required.
Rather than expecting candidates to possess every skill listed, a skills-based job description may also emphasize the potential for growth and development, encouraging candidates who demonstrate a willingness to learn and acquire new skills.
Overall, a skills-based job description provides a comprehensive overview of the specific skills and competencies required for a position, enabling both recruiters and candidates to focus on what truly matters for success in the role.
Why is skills-based hiring better for some companies?
For some companies, skills-based hiring offers a more objective, efficient and adaptable approach to talent acquisition that aligns with the needs of modern workplaces.
Skills-based hiring prioritizes candidates’ actual abilities and competencies over factors such as education or previous job titles. This ensures that candidates are assessed based on their potential to perform the job effectively rather than superficial criteria.
Matching candidates’ skills directly to job requirements results in better job fit. Employees are more likely to succeed and thrive in roles that align with their skills, leading to higher job satisfaction and performance.
How we reviewed this article
Since 2013, we have helped more than 15 million job seekers. We want to make your career journey accessible and manageable through our services and Career Center’s how-to guides and tips. In our commitment to bring you a transparent process, we present our Editorial Process.
Sources
- The White House. Executive Order. Executive Order on Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates
- The Burning Glass Institute. Report. The Emerging Degree Reset: How the Shift to Skills-Based Hiring Holds the Keys to Growing the U.S. Workforce at a Time of Talent Shortage
- TestGorilla. Article. The State of Skills-Based Hiring 2023
- U.S. Chamber of Commerce. Article. Scaling Up Skills-Based Employment Practices for American Businesses
- McKinsey & Company. Article. Hancock, Bryan and Weddle, Brooke. Right skills, right person, right role
- Economic Policy Institute. Article. Scott, E. Robert and Cooper, David. Almost two-thirds of people in the labor force do not have a college degree
- Every Child Thrives. Article. Using a skills-based hiring approach as part of a DEI strategy
- TestGorilla. Article. 9 job roles that are ideal for skills-based hiring
- Google. Our hiring process
- IBM. Application process
- Lattice. All Hands Podcast. The Importance of Skills-Based Hiring with IBM’s Obed Louissaint
- Microsoft. Blog. Smith, Brad. Building a more inclusive skills-based economy: The next steps for our global skills initiative
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Skills-Based Hiring is Revolutionizing Talent Acquisition
Elizabeth is a Certified Professional Resume Writer (CPRW) and a member of the Professional Association of Résumé Writers & Careers Coaches. She is passionate about delivering information that empowers job seekers to achieve their professional goals.
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