Is Skills-Based Hiring the Future of Work?

HR leaders are aware of the need to make recruitment more inclusive. However, hiring managers often overlook candidates from non-traditional routes. Could skills-based hiring be the solution?

The cost of higher education has risen dramatically in recent decades. US college graduates took on an average debt of $29,900 in 2019. Understandably, this is simply not an option for many people.

College degrees used to be the ticket into highly skilled and highly paid employment. A four-year degree requires grit, attention to detail and time management. But candidates can also show these attributes in myriad ways – from challenging life experiences to volunteering and previous work experience.

Tech companies like Apple and Google are starting to take note. As Lazlo Block, Google’s former SVP of People Operations put it, 'When you look at people who don’t go to school and make their way in the world, those are exceptional human beings. And we should do everything we can to find those people'.

Skills-based hiring allows companies to tap into a more diverse pool of talent. It helps people from all backgrounds get a foot in the door. Study after study shows that inclusive organizations deliver: with a 36% increase in business outcomes for companies with diverse executive teams. Beyond this, you create opportunities for people to shine which they might overwise have missed.

'When you look at people who don’t go to school and make their way in the world, those are exceptional human beings. And we should do everything we can to find those people' - Lazlo Block, former Google SVP of People Operations

What is skills-based hiring?

Skills-based hiring places a greater emphasis on skills rather than credentials or level of education. Skills may be technical, such as maths skills or software skills, or soft skills such as customer service and critical thinking.

Opportunity@Work is a non-profit which targets the opportunity gap: the inequalities that makes access to career pathways harder. Whether it’s professional networks or paying for a degree, those from lower income backgrounds are often left on the backfoot. As they highlight on their website: ‘Too many employers assume – falsely that “no degree” equals “no skills”’.

Selling your skills to a hiring manager without a degree takes guts. Those without degrees have to face an uphill climb of rejection letters before they can secure the role they want.

Opportunity@Work supports candidates, or STARS (Skilled Through Alternative Routes) to communicate their enthusiasm and abilities in applications. This experience might be developed in community colleges, online learning, volunteering or military service.

Strikingly, Opportunity@Work highlight that when employers screen out applicants without a four-year degree, they exclude 68% of African Americans, 79% of Latinx people and 73% of rural Americans.

In response, hiring managers are changing their practices to account for different forms of experience. Skills assessments and psychometric assessments are becoming the norm. Companies are also adapting job descriptions and removing degrees as a requirement on applications.

Skills-based hiring is expanding

The pandemic has taken a devastating toll on employment. However, some sectors are facing unprecedented turnover and vacancies.

Job seekers need to consider how their skills are transferable. A waiter who lost their job due to widespread restaurant closures has transferable skills for customer-service roles – but they may not know how to present this on an application.

LinkedIn’s pilot scheme Skills Path aims to connect job searchers with employers based on their skills, rather than work history. Online learning credentials and Skills Assessments promote opportunities for people to showcase their abilities. The platform has attracted recruiters from GapInc to Microsoft to Task Rabbit.

Meghan Kelly, Global Head of Talent Acquisition at GapInc, writes, ‘participating in LinkedIn’s Skills Path pilot will help us connect with candidates faster based on core skills and potential rather than traditional experience or credentials, which creates access to an even more diverse talent pool’.

Skills-based hiring could support those from sectors devastated by the pandemic to transfer into new professions.

Watch this video to hear Heather Whiteman explain how the US federal government is opening up job postings for non-graduates 📹

Higher ed leaves skills gaps

The QS Global Skills Gap Report of 2019 found that the widest skills gaps amongst graduates were:

1. Problem Solving

2. Resilience

3. Communication

4. Leadership

There are myriad ways to build these skills outside of higher education. Leadership skills can be developed through experience on a sports’ team, or from managing community groups. Problem solving skills can be built through apprenticeship programs, or demonstrated through online assessments.

Creating a barrier for non-graduates means shutting out all of this valuable experience. It means keeping your organization closed to those who might fill skills gaps most effectively.

Online learning provides upskilling beyond a degree

The pandemic has revealed the power of online learning. From the comfort of our own homes, we can learn about anything from accountancy, to data science, to creative writing.

Whether it’s through Coursera, FutureLearn, LinkedIn Learning or edX, there are so many free opportunities to learn and upskill. This opens us up to a world of knowledge that was inaccessible to most a few decades ago.

For many, university courses are just not flexible enough. Online micro-courses cater to those with caring responsibilities, or who work full-time. You can carve out study in the evenings, without having to leave the house.

Give online learners the recognition they deserve. Ultimately, if you’ve learnt a technical skill, it shouldn’t matter whether you’ve done it from your kitchen or a college library.

From the comfort of our own homes, we can learn about anything from accountancy, to data science, to creative writing

Employers see the value of soft skills

The pandemic brought a host of challenges for organizations. When we think about what saw us through this difficult year, it’s often soft skills that come to mind: resilience, compassion, teamwork.

According to SHRM, 89% of employees who fail at a job within 18 months do so because of a lack of soft skills, for example, their ability to work well with others. Soft skills come at a premium and given the current turnover rate of employees, organizations cannot afford to ignore them anymore.

For example, 2/3rds of America’s war veterans do not hold a four-year degree - but are equipped with ample technical and soft skills, from leadership to communication, which are invaluable to organizations.

It’s crucial that HR and recruitment leaders assess soft skills holistically.

Changing up the recruitment process

Traditionally, the first step into a role is sending off your resume. This outlines your work and education history. It’s at this early point that many applications from people with non-traditional experience are thrown out.

Many organizations are changing up the timescales of their recruitment. While application forms and resumes are used at this initial stage, online assessments, verbal reasoning and problem-solving tests are also being used.

These are an opportunity to judge skills based on merit. Bear in mind, pre-employment tests are still not objective measures of competence, and need to be combined with other methods.

Skills-Based Hiring for an Upskilled Future

As we look towards the new world of work, skills-based hiring could bring us more equitable workplaces. It improves access for people from underrepresented backgrounds, ensuring that no one’s talents are overlooked.

Skills-based hiring can also address the challenging skills gaps we face. If you only hire individuals from the same academic and employment background, you’ll find team members have many skills (and skills gaps!) in common.

By broadening your pool of candidates, you’ll find candidates with new competencies to offer - who will grow with your organization.

Read this article on remote interview questions for more on recruitment 📖