"Skills-based hiring" — it's a phrase we hear often, but do you know what it is? How did this phrase evolve, and what does it mean for employers and the future of recruitment? In this blog article, we’ll explain why companies are putting more emphasis on skills-based hiring and how it can help you make better hiring decisions.
What is skills-based hiring?
This recruiting practice assesses potential employees based on their abilities as opposed to their degrees or certificates. Rather than eliminating or pushing job-seekers through to the next round of interviews according to what's on their CVs, organizations that prioritize skills-based hiring select workers who, simply put, are capable of doing the job.
Such competencies include great verbal and written communication, critical thinking, and problem-solving. Some employers evaluate a candidate's suitability by administering tests designed to see if a candidate has the skills they claim.
At Employbridge, for example, we conduct job-specific skills assessments and testing at onboarding and behavioral and situational judgement tests that ensure candidates are job-ready. While we don’t do this for every role or industry, we do assess candidates when needed and as requested by our clients. Some examples include: Warehouse and Logistics: Forklift certification, safety compliance, pick/pack accuracy. Manufacturing: Industrial math, assembly skills, machine operation knowledge. Contact Center: Typing speed, customer service scenarios, conflict resolution.
Why have organizations moved toward it?
As Harvard Business Review explains, employers have begun to add formal qualification requirements for the same job descriptions in what's become known as "degree inflation." It's been the norm to see prerequisites like "bachelor's degree" and "at least 3 years of industry experience" in a job listing.
These stringent conditions have alienated vast swaths of potentially excellent workers by discarding their applications without a second thought. Rising numbers of organizations have recently realized this and adapted their recruitment process accordingly.
The "Great Resignation" that began in 2021 saw employees quitting their jobs en masse, resulting in a massive and widespread labor shortage. As Entrepreneur explains, employers are coming to understand that if they want to fill their vacancies, they need to look beyond a university transcript.
What are the advantages of skills-based hiring?
The primary benefit of adopting a skills-based hiring approach is obvious: the employee talent pool expands considerably.
Secondly, employers are more likely to find the right person for the available position when they don't focus on formal qualifications. The person with a commerce degree who can crunch numbers won't be right for the marketing position, but the person without a degree who understands consumer needs will be.
Furthermore, employers who adopt a skills-based hiring approach enjoy greater employee retention: a study conducted by Harvard Business Review found that workers hired based on their prowess stay with their employer almost 35% longer than hires based on their certifications.
Additionally, as the Australian software company Vervoe explains, minorities such as people of color have been subject to systemic oppression that prevents them from obtaining a university degree or even completing high school. Skills-based hiring allows companies to improve their diversity, which is crucial for success.
What are the implications?
As more organizations turn toward skills-based hiring, those who don't will be left in the dust. Job-seekers themselves are increasingly realizing that their capabilities are far more valuable than their education and tend to mistrust employers who prioritize the latter over the former.
Between employers needing to fill vacancies and qualified candidates becoming more discerning over the companies to which they apply, hiring managers will need to reassess their hiring practices if they want their organization to stay relevant and competitive.
Want to learn more about skills-based staffing at Employbridge?
Employbridge is the nation’s largest provider of light-industrial staffing, offering expert support, higher-quality matches, and innovative technology. By championing people, unlocking potential, and bridging skills gaps, we empower teams to build a future-ready and high-performing workforce.
Contact us today to schedule a consultation or to learn more about our staffing solutions.
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