How to Use Skill-Based Hiring to Build a Stronger Workforce

Female hiring manager conducting a skill based interview at her desk with a stack of hiring assessments

Seismic shifts are happening right now in the world of work. One thing that’s changing fast? The requirements to get a job. More employers are throwing out rigid education requirements in favor of hiring based on a candidate’s technical and personal capabilities. This is known as skills-based hiring. 

We’ll define skills-based hiring, explain why more companies are adopting it and share tips for building a stronger, more diverse workforce by hiring based on skills. 

What is Skill-Based Hiring?

In skills-based hiring, candidates are screened based on their hard and soft skills rather than their background or education. This method of hiring is different from degree-based hiring where a candidate needs certain education credentials, like a Bachelor’s degree, to be screened into the next phase of the hiring process. 

Skills-based hiring uses hands-on techniques like skills tests and job shadowing to assess candidates instead of relying primarily on an ATS that scans for specific keywords. Skills-based hiring works to identify candidates that actually possess the necessary talents and capabilities to accomplish a job as opposed to merely having a resume that looks a certain way. 

Why Skill-Based Hiring is on the Rise

Employers far and wide are struggling to fill open positions and cover skills gaps in their staffing charts. The leisure and hospitality field, for example, has maintained an 8.1% hiring rate (the rate at which an industry is trying to fill open positions) since November 2020–that’s nearly double the national average for all industries. 

At a time when good workers are scarce, strict requirements for education or background experience make it even harder for companies to hire, dramatically shrinking an already-small candidate pool. 

That’s why things are changing. 

A study by Harvard Business Review looked at the degree requirements found in more than 51 million job listings between 2017 and 2020. What it found was that employers are resetting or eliminating degree requirements on a widespread scale. 

The change was most noticeable for what the study authors call “middle-skill positions”–jobs that call for some post-secondary education or training but that don’t require a full four-year degree. The change was also apparent in some higher-skill positions. 

Additionally, some companies stand out in leading the move to skills-based hiring. IBM, for example, has been forthcoming about its initiative to prioritize skills over degrees. Now, just 29% of the company’s IT positions require a certain level of education. 

As IBM and other companies have found, hiring based on skills not only widens the candidate pool and opens opportunities to workers from more diverse backgrounds; it helps promote employee longevity, as well. 

Benefits of Skill-Based Hiring

Overcome hiring challenges

The first and most pertinent benefit of skills-based hiring is that it can help companies address urgent staffing needs. Eliminating degree requirements encourages more candidates to apply, which in turn can make it easier to fill open positions faster and at a lower cost. 

More reliable than resumes

Hiring managers must remember that resumes are a candidate’s best presentation of themself. As a result, they can be embellished. Just ask any manager who’s onboarded a candidate who allegedly comes with “extensive experience” in a certain area, only to have to train them completely from scratch. Additionally, merely possessing a degree in a field of study doesn’t guarantee a person’s proficiency in it. 

Skills-based hiring gives employers an accurate, verifiable picture of a candidate’s actual knowledge in any given area. 

Inclusive of alternative candidates

Skills-based hiring opens up your hiring pool to candidates you wouldn’t have reached otherwise–coders who are self-taught, for example, or people getting a later start to their career after first raising a family. 

It also helps identify transferable skills from candidates with non-traditional work experience. Someone who worked as a restaurant server, for example, likely has the customer service skills and attention to detail that would help them excel in a role like a personal assistant. 

Reduce hiring bias

There’s a sequence of events that scholars describe as the “success sequence”–a recipe for achieving economic success in America. The sequence is as follows: graduate from high school, get a full-time job or have a partner who does, and delay having kids until you’re married and at least 21 years old. 

Skills-based hiring helps level the playing field for candidates who haven’t followed the narrowly defined success sequence, reducing bias toward things like degrees from a certain school or a specific type of work background. 

Related: Beware of These Subconscious Hiring Biases

Improve hiring success

There’s one objective all hiring managers have in common: to get someone in the job who’s capable and competent. If a new hire lacks technical skills, it increases training time, stalls productivity and can contribute to turnover. Skills-based hiring increases the likelihood of making the right hire the first time around, helping control costs and improve time to productivity. 

How To Hire Based On Skills

Skills assessments

The easiest way to practice skills-based hiring is to use skills assessments. These are unbiased tests that provide a verifiable way to evaluate a candidate’s ability to perform the duties listed in the job description. Skills assessments can focus on hard skills, like programming languages, or soft skills, like decision-making.

Related: How to Use Pre-Employment Assessments to Make Better Hires

Skill-based interview

A skill-based interview asks questions designed to determine whether a candidate’s abilities align with the organization’s needs. Here are a few examples:

  • What is data analysis and what tools do you use to conduct it?
  • Tell me about a time when you had to use conflict resolution at work. 
  • What’s the most complex manufacturing process you’ve worked on?

As you can see, these questions zero in on particular skill sets and a candidate’s proficiency with them, as opposed to much less specific questions like “tell me about your background.”

Job auditions

A job audition is a step of the interview process that involves a simulation or actual trial of the role a candidate has applied for. Candidates might work alongside an existing employee in the role or be asked to complete a test project. Job auditions give hiring managers a tangible example on which to judge a candidate’s aptitude. 

Upskill and Reskill On The Job

The emphasis on skills should continue even after a hire is made. As the U.S. Chamber of Commerce advises, “businesses can increase their hiring pools by… [providing] opportunities for new and existing staff to be upskilled and reskilled on the job.” 

It’s one of the steps IBM took in the initiative we mentioned earlier to prioritize skills. According to the company’s CHRO Nickle LaMoreaux, “the half-life of skills is shortening,” meaning that all workers require constant training to remain competent and help the company stay competitive. 

Related: How to Invest in Employee Development


Resources and sources

  1. https://www.uschamber.com/workforce/understanding-americas-labor-shortage-the-most-impacted-industries
  2. https://www.brookings.edu/research/following-the-success-sequence-success-is-more-likely-if-youre-white/
Pete Newsome

About Pete Newsome

Pete Newsome is the president of 4 Corner Resources, the nationally acclaimed staffing and recruiting firm he founded in 2005. His mission back then was the same as it is today: to do business in a personal way, while building an organization with boundless opportunities for ingenuity and advancement. When not managing 4 Corner’s growth or spending time with his family of six, you can find Pete sharing his sales and business expertise though public speaking, writing, and as the host of the Hire Calling podcast.