Potential Over Pedigree: The Importance of Skills-Based Hiring

Attracting and retaining talent is key in a competitive labour market, but employers need to know who and what they’re looking for.

Skills are an increasingly crucial indicator of talent according to HR leaders, who say that skills and creativity will be vital to their recruitment efforts over the next 20 years.

Skills-based hiring is the next big thing but it’s more than just a trend, it’s a fundamental shift towards better, more equitable hiring that puts the right job opportunities in front of the right people. It’s exactly what it sounds like, prioritising a candidate’s skills over their qualifications or employment history.

People’s credentials and past experiences are often down to circumstances beyond their control. Some people haven’t had the chance to go to university, and many more are locked out of certain industries and roles by lack of career pathways. Besides, some studies suggest that traditional indicators – such as specific years of experience – aren’t always the best ways of predicting a candidate’s suitability for a role.

A skills-first approach means employers can equitably assess more diverse experiences and hire people who have previously been left out in the cold. Skills-based methods recognize the reality that not everyone has the time or means to pursue education, but it doesn’t invalidate degrees: it makes it easier for everyone to find their perfect job by encouraging employers to look at a greater variety of data points.

One way that employers are implementing skills-based hiring is by dropping the requirement for a degree from their job adverts. Research conducted by Harvard Business School suggests that this ‘degree reset’ occurred in two waves, beginning in 2017 as a response to a tight employment market. Between 2017 and 2019, employers reduced degree requirements for 46% of middle-skill positions and 31% of high-skill positions. The second reset happened at the start of the coronavirus pandemic as employers became increasingly willing, at least temporarily, to forgo degree requirements for many jobs.

But skills-based hiring isn’t being adopted fast enough to keep pace with changes in the labor market, according to research published by General Assembly. A college degree is still listed as a requirement in 52% of job adverts for roles in tech while 45% cite a degree as a top determining factor. And yet, 90% of the HR leaders General Assembly surveyed said that they are concerned that current recruitment methods won’t be enough to fill their open positions in the current labor market. Just 23% have updated their requirements to provide more opportunities for candidates from non-traditional hiring pools.

Employers risk missing out on the talent of tomorrow if they don’t implement skills-based hiring, and the ones that are doing so are reaping the benefits. Around 40% of hiring professionals on LinkedIn are using skills data to identify candidates, up 20% year-on-year, and they’re 60% more likely to fill a role vacancy than those not using skills data.

Skills are becoming the new currency of the employment market. A changing global labour environment means we’ll need to reskill or upskill over 1 billion people by 2030. A tight labour market and the coronavirus pandemic stimulated a shift towards skills-based hiring over traditional practices but that momentum needs to be maintained if employers are going to surmount the challenges of the employment market. A more equitable, more productive future is possible, and skills-based hiring can help to create it.

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