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Why Skills-Based Hiring is Becoming More Popular

Published 12 months ago • 4 min read

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.

Skills-based hiring benefits organizations in the following ways:

  • Increasing popularity: A study by LinkedIn found that 60% of global talent acquisition leaders believe that skills-based hiring will become the primary method of recruitment in the next five years. This suggests that skills-based hiring is becoming increasingly popular among employers.
  • Higher success rate: A survey by ManpowerGroup found that 77% of employers who use skills-based hiring reported a higher success rate in finding the right candidate for the job, compared to traditional methods of recruitment.

  • Reduced turnover: Another study by ManpowerGroup found that skills-based hiring can lead to reduced turnover rates, with 78% of employers reporting a decrease in turnover among employees hired through this method.

  • Improved diversity: A report by Deloitte found that skills-based hiring can lead to improved diversity in the workplace, as it allows employers to consider candidates from a wider range of backgrounds and levels of education.
  • Better alignment with job requirements: A study by Glassdoor found that skills-based hiring can lead to better alignment between the job requirements and the skills of the candidate, which can result in improved job satisfaction and performance.

Some of the largest companies in the world are using skills-based hiring to fill positions:

  • IBM was one of the early adopters of skills-based hiring, and it has become a key part of the company's recruitment strategy. IBM uses a combination of online assessments, coding challenges, and hands-on demonstrations to evaluate an applicant's skills and determine their fit for a role.
  • Deloitte is another company that uses skills-based hiring, and it has implemented several initiatives to identify and evaluate an applicant's skills, including the use of online assessments, virtual simulations, and behavioral-based interviews.
  • Amazon is well-known for its use of skills-based hiring, and the company has implemented several innovative recruitment methods, including online coding challenges, behavioral interviews, and reference checks.
  • Accenture is a leading management consulting firm that uses skills-based hiring to find the right fit for its roles. The company assesses an applicant's skills through a combination of online assessments, behavioral-based interviews, and work samples.
  • Salesforce is a customer relationship management software company that uses skills-based hiring to identify the best candidates for its roles. The company uses a combination of online assessments, coding challenges, and behavioral-based interviews to evaluate an applicant's skills.

While there are many benefits of skills-based hiring, there are some important downsides consider as you consider candidates such as:

  • Bias: Some experts have raised concerns about the potential for bias in skills-based hiring, as certain groups of people may be disadvantaged if the selection criteria are not fair and impartial. For example, certain online assessments may favor individuals with certain backgrounds or levels of education.
  • Limited assessment: Skills-based hiring can sometimes be limited in its assessment of a candidate, as it may only evaluate a narrow set of skills and not take into account other important factors, such as personality, attitude, or cultural fit.
  • Cost: Implementing skills-based hiring can be costly, as it often involves the use of specialized tools and resources, such as online assessments and simulations.
  • Resistance to change: Some candidates and employees may resist the adoption of skills-based hiring, as it can be perceived as a departure from traditional methods of recruitment and selection.
  • Lack of experience: Some employers may be hesitant to hire candidates without work experience, as they may lack the necessary context and judgment to perform the job effectively.

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!

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