Skills-based hiring, also known as competency-based hiring, is a recruitment approach that prioritizes an applicant's skills and knowledge over their academic background or work experience. In recent years, it has gained widespread popularity among employers and is now considered a leading trend in the world of recruitment. Recent research by Remote shows skills-based hiring is up 63% in the past year as more employers value experience over academic qualifications. In addition, a SHRM study found that 79% of employers say skills assessments are just as or more important than other hiring criteria.
The primary reason behind the growth of skills-based hiring is the changing nature of work. With technology constantly evolving and the job market becoming increasingly competitive, employers are looking for candidates who have the necessary skills to perform the job and adapt to new challenges. In this context, an applicant's academic qualifications and work experience, while important, are no longer the sole determining factor in their employability.
Another reason for the popularity of skills-based hiring is the increasing demand for job-ready candidates. Employers today want employees who can hit the ground running and make an immediate impact, and skills-based hiring provides them with the assurance that the candidate they are hiring has the necessary abilities and knowledge to do just that. This results in a more efficient and cost-effective recruitment process, as employers no longer have to invest time and resources in training new hires.
In addition, skills-based hiring allows employers to attract a wider pool of candidates, including those who may not have traditional backgrounds in their industry. This helps to create a more diverse and inclusive workplace, where individuals from different backgrounds can bring their unique skills and perspectives to the table. The Burning Glass Institute analyzed millions of online job listings and found that the number of jobs requiring a college degree dropped from 51% in 2017 to 44% in 2021. And a survey by LinkedIn shows that 69% of professionals think verified skills are more important than a college degree.
Moreover, skills-based hiring also aligns with the evolving needs of the workforce. As the job market becomes more gig-oriented, with a growing number of workers seeking freelance or contract-based employment, skills-based hiring allows them to showcase their capabilities and find work that is tailored to their skills.
Despite the downsides, the trend toward skills-based hiring is likely to continue as employers look for the most effective and efficient way to find the right candidate for the job. Skills-based hiring is becoming more popular among employers because it addresses the changing nature of work, the increasing demand for job-ready candidates, the need for diversity and inclusion in the workplace, and the evolving needs of the workforce. As the job market continues to evolve, it is likely that skills-based hiring will only become more prominent in the years to come.
Thanks for reading — be sure to join the conversation on LinkedIn and let me know your thoughts on this topic!
Check out the previous issues of the Workplace Intelligence Insider newsletter below and subscribe now to get new articles every Monday.
News Spotlight Boomerang employees have returned. Businesses that cut too many jobs are turning to ex-employees who can get up to speed quickly (Wall Street Journal). HR is pressured to enforce RTO policies. CEOs have put HR in charge of creating and enforcing RTO policies that require workers to be in the office for a set number of days (Fast Company). AI chatbot mentors aren’t always effective. Workers who need practice in the art of asking the right questions at the right time may not get...
News Spotlight Entry-level jobs are being automated. AI is competing for jobs with college graduates as labor conditions have declined since the start of the year, even for M.B.A. grads (The Atlantic). AI helps job seekers change careers. New tools give users insight into how skills in one field can transfer to a different one (The Wall Street Journal). Pay-for-performance incentivizes productivity. Google, Amazon, and other companies are rewarding top performers to get higher rewards and...
News Spotlight Office amenities are being used for RTO. Companies are offering free food, a spa, sports activities, and more in order to lure workers back to offices (Chicago Tribune). The return of shared workspaces. More companies are ditching individual desks and embracing shared spaces (Fortune). ESOPs gain popularity as an employee benefit. Employers gravitate toward employee stock ownership plans for retention purposes (CNBC). Stat of the Week A new study finds that leaders expect their...