Skills-Based Hiring: 5 Reasons to Hire Based on Talent

Companies should grasp the value of skills-based hiring for more effective talent acquisition and retention than traditional strategies.

Traditionally, employers have evaluated candidates for hiring and promotion according to their education, experience, and previous positions. However, the rising competition for talent and a skilled worker shortage prompt businesses to rethink their hiring strategies and whether the skills-based hiring process is ideal for finding the best candidate.

This article briefly discusses how skills-based hiring became a critical strategy and outlines five benefits.

How Skills-Based Hiring Became a Standard Practice

Skills-based hiring focuses more on a candidate’s performance and practical skills than on their formal qualifications. With this approach, hiring managers stress real skill sets rather than prior employment histories, professional backgrounds, and track records.

Traditionally, HR managers prioritize individuals with traditional qualities such as suitable educational degrees and personal recommendations and concentrate on matching a candidate to a job profile. The applicants who checked off the most boxes advanced through the interview process and received an offer.

However, the COVID-19 pandemic compelled businesses to reduce working hours or eliminate positions. At the time, many unemployed workers had superior talent but didn’t fit the “on paper” qualifications for open positions. On the other hand, many candidates with solid resumes did not exhibit the most promising long-term potential.

In the end, employers discovered that selecting applicants with the potential to pick up new abilities quickly and successfully transfer between job functions (retraining) was more productive than selecting someone with instant credentials but limited upside potential.

5 Benefits of Skills-Based Hiring

Skills-based hiring is crucial because it concentrates on discovering and selecting people based on their skills and talents rather than just their education or job experience.

The benefits of skill-first recruiting include the following five:

1. Diversify the Talent Pool

Diversifying the talent pool is critical to identifying and hiring the best candidates. Skills-based hiring can help expand their candidate through the following strategies:

  • Reducing the emphasis on traditional credentials. Formal education and professional experience are frequently highly valued in traditional hiring procedures, which might disproportionately favor some groups while excluding others. Companies can expand their candidate pool by hiring people with various educational backgrounds and non-traditional work experience by focusing on skills and competencies.
  • Identifying hidden talent. People from underrepresented groups may have skills and talents that are only sometimes recognized or valued by traditional hiring processes. Skill-first hiring can help identify and develop these skills, leading to a more diverse and capable workforce.

2. Build Employee Trust and Retention

A vital component of what makes a workplace outstanding is offering people chances to learn and develop.

Most industries have traditionally concentrated on providing their employees with training based on existing and ready-made training development solutions. However, individuals need learning and development strategies geared at upskilling and reskilling based on the demands of their employers.

In this sense, skills-based training programs focus on developing specific talents that will be important in the future workforce. A projected increase in trust between employers and employees, a crucial enabler for employee engagement, satisfaction, and retention, results from investing in people’s skill needs and ambitions.

3. Reduce Hiring Bias

Due to its emphasis on objective rather than subjective criteria, skills-based hiring can aid in the reduction of implicit prejudice and discrimination in the employment process. Three reasons are as follows:

  • It focuses on objective criteria. Hiring managers are less likely to be influenced by unconscious biases when they emphasize a candidate’s skills and talents more than arbitrary elements like name, gender, or race.
  • It uses structured interviews. Using planned interviews with the same questions for all candidates is common in skills-based hiring. By ensuring the interviewer assesses all candidates using the same criteria, they can help to decrease prejudice.
  • It minimizes reliance on resumes. Frequently, information on resumes—like a candidate’s name, address, or place of education—can contribute to bias. Instead of emphasizing subjective characteristics like educational background or job experience, skill-first recruiting emphasizes objective standards like skills and competencies.

4. Created Future-Proof Talent Pipelines

Traditional career paths have focused on discrete occupational fields graded from best to lowest in terms of responsibility and income. Abilities nowadays enable people to take control of their careers by allowing them to choose how long they want to remain in a current post and how they want to use their present abilities to transition into other roles within the same organization or in different companies and industries.

In general, the hiring strategy of “skills-first” can help businesses develop a competent and diverse workforce, enhance employee performance, and maintain their competitiveness in a labor market that is undergoing rapid change.

The career path that is skills-focused allows people to seek both vertical and horizontal mobility within the company, including, among other things, possibilities for job advancement, dual career ladders, and expedited or dialed-down career pathways.

5. Improve Employee Performance

Employees who are more suited to their tasks and have the required skills to succeed can perform better on the job and be more productive due to hiring based on skills and abilities. The following are more concrete ways that skills-based hiring might raise employee performance:

  • Increased job satisfaction.  Employees are more likely to feel respected by their company when hired based on their talents and abilities, resulting in better performance, a more uplifting workplace atmosphere, and higher levels of job satisfaction.
  • Better engagement. Employees are more likely to be involved in their work if they believe their abilities are valued. As a result, there may be an increase in output, improved performance, and general job satisfaction.
  • Reduced turnover.  Employees are more likely to succeed in their professions and less likely to leave the company when hired based on their abilities and competencies. Reduction in turnover can lead to cost savings and improved overall performance.

Finding the Best Talent Requires the Best Worker Management Software

Skills-based hiring helps companies increase the number of qualified applicants they can choose from, find untapped potential, and lessen the effects of unconscious biases by focusing on objective criteria. It can also boost job satisfaction, engagement, and lower attrition, all of which contribute to a more prosperous and productive business.

Adapting these strategies and leveraging a software solution to help you source workers from a pre-qualified database, will help you face the skilled labor shortage head-on.

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