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Skills-based hiring is on the rise. Also referred to as skills-first hiring, this approach focuses on identifying talent based on skills and competencies that align well with the position requirements, instead of relying on traditional qualifications such as college degrees, minimum years of experience, and job titles. With the rise of technical roles in various industries and amid tight labor market conditions, this hiring shift is accelerating.  

Part of it, is employers realizing they may be able to do a better job finding the right talent by looking for the skills or competencies because someone needs to do the job and not let a degree get in the way of that,” shares Parisa Fatehi-Weeks, Sr. Director Environmental, Social, and Governance (ESG) at Indeed during a discussion with CBS MoneyWatch 

 Over time, we’re witnessing that this hiring practice is gaining wider acceptance, given that a greater number of workers (particularly in technical roles) don’t need a degree to perform their jobs. Recent LinkedIn statistics reveal that there has been a 21% increase in job postings covering only skills and competencies instead of qualification requirements. Additionally, a survey by an Amsterdam-based talent assessment platform, TestGorilla, reveals that 73% of employers focused on skills-based hiring practices in 2023 as compared to 56% in 2022.  

The Skills-Based Approach 

Should employers limit themselves to stringent degree requirements as part of a good hiring practice? Did the degree inflation trend bring in the best hires? The Great Recession, the COVID-19 pandemic, and rising inflation rates have changed the way employers view their hiring and talent management practices. Under this new approach, stringent degree completion requirements are being scrapped by employers, who are instead focusing on hiring workers based on their skills and competencies. The outcome? Availability of a larger talent pool and opening of more opportunities for job seekers who faced little to no hiring consideration due to the previous degree inflation tide.  

Hiring for Potential 

Despite challenging inflationary and rising unemployment numbers, companies are struggling to attract and retain talent. Hence, we see a greater need for companies to shift focus and implement more innovative hiring strategies. Let’s look at why employers should leverage the ‘reset’ and embrace effective skills-based hiring practices.  

Broader Talent Pool 

In today’s rapidly evolving business environment, many emerging industries, particularly those linked to technology, artificial intelligence, and digital transformation are facing huge talent gaps. Since traditional hiring methods often fail to capture the diverse skills required in these innovative sectors, the availability of talented resources remains scarce. Skills-based hiring, therefore, allows organizations to tap into non-traditional talent pools and identify a larger population of potential employees with unique skills and capabilities.  

Better Retention Rates 

To put it simply, this is ‘the right candidate for the right job’ mantra. When you’re hiring as an employer or a hiring manager, you hire to retain – period. The cost of turnover approximately 33% of an employee’s annual salary, is a cost no one wishes to incur. With skills-based hiring, you’re bringing in the skills that align best with the required role thus strengthening retention in your workplace. McKinsey states that “Hiring for skills is five times more predictive of job performance than hiring for education and more than two times more predictive than hiring for work experience.” 

Cost-Effective Talent Development 

With the skills-based hiring approach, employers can invest in targeted training and competency development. So instead of seeking ‘the ideal candidate’, companies focus more on hiring individuals with core competencies and potential. They then work on developing specific skills through targeted training programs that are identified for their employees.  

Diverse and Inclusive Workforce 

Stringent degree requirements in the past meant that many job opportunities were inaccessible to those without a college education. Over the last ten years, the cost of acquiring a college degree has gone up by almost 25 percent, meaning it may be unaffordable to a large part of the population today.  

But, with the skills-based approach, you’re allowing better accessibility, and opening doors of opportunities for candidates from diverse backgrounds who might have been previously overlooked in traditional hiring processes. This includes career changers, self-taught professionals, and individuals from underrepresented groups.  

Final Thoughts 

The hiring reset is gradually gaining momentum and acceptability. Employers are now able to see how skills-based practices are giving them access to a greater talent pool. From a broader perspective, this is a win-win situation for both – organizations and employees. As employers work on being more agile and adopting flexibility across their talent-acquisition processes, workers are becoming more focused and better equipped to search for jobs that alignwith their skills and competencies.  

 The Crosworks team can help you streamline your hiring processes and connect you with candidates who best fit your skills and competencies requirements. We work closely with organizations to help them attract and retain their talented workforce by giving them tools to chart a path of goal-driven development. Schedule a free call to connect with our experts and learn how we can help your organization identify and orient key strategic hires.  

 

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