Skills-Based Hiring is Revolutionizing Talent Acquisition

Elizabeth Muenzen, CPRW
By Elizabeth Muenzen, CPRW, Career Advice Expert Last Updated: May 21, 2024

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In today’s rapidly evolving job market, traditional hiring practices often fall short of identifying a candidate’s true potential. 

As employers strive for innovation and inclusivity, a shift towards skills-based hiring is gaining momentum.

This emerging approach prioritizes a candidate’s abilities, competencies and potential over their formal education or previous roles.

What is skills-based hiring?

Skills-based hiring is a recruitment strategy that focuses on assessing and prioritizing candidates based on their professional skills and capabilities rather than formal qualifications such as credentials or years of experience.

This approach aims to provide a more accurate measure of a candidate’s potential to succeed in a role.

It allows employers to find the best fit for their team based on demonstrated abilities rather than relying solely on traditional, credential-centric markers of success.

In skills-based hiring, employers identify the hard skills and soft skills required for a particular role, evaluating candidates based on their proficiency in those areas through methods such as assessments, simulations or work samples. 

Advantages of skills-based hiring

Explore some of the key benefits of skills-based hiring for both employers and employees to learn how this approach broadens the talent pool and increases opportunities for job seekers. 

How skills-based hiring benefits job seekers

Increased job opportunities

Skills-based hiring opens doors for candidates who may have non-traditional career paths or unconventional backgrounds. 

According to a report from The Burning Glass Institute, The Emerging Degree Reset, the shift toward skills-based hiring could expand opportunities for Americans without a college degree, nearly two-thirds of the labor force as of 2024. 

Based on these trends, we project that an additional 1.4 million jobs could open to workers without college degrees over the next five years.The Burning Glass Institute

Employers focused on skills-based hiring are often more likely to consider candidates with transferable skills and diverse experiences, leading to a broader talent pool and increased opportunities for job seekers. 

Streamlined application process

Skills-based hiring often involves streamlined application processes, with less emphasis on the traditional resume education section or extensive work history. 

This makes it easier for job seekers to apply for new roles by focusing on concisely presenting their relevant skills and experiences.

In fact, a 2023 TestGorilla survey found that 56% of employees say they prefer hiring processes that include skills-based assessments. 

Reduced employer bias

Skills-based hiring helps reduce bias in the recruitment process by focusing on objective criteria such as skills and competencies. 

In 2020, the White House issued an executive order detailing plans to improve the federal hiring process by incorporating skills-based assessments and reducing reliance on traditional qualifications such as degree requirements. 

The executive order notes, “Modernizing our country’s processes for identifying and hiring talent will provide America a more inclusive and demand-driven labor force.”

Ultimately, when candidates are evaluated based on their abilities rather than traditional factors such as education credentials, it leads to more well-rounded and equitable hiring decisions.

Improved job satisfaction

Through skills-based hiring, job seekers are often more likely to find roles that align with their skills and career goals. 

This leads to better job fit and satisfaction, as candidates are matched with positions where they can contribute effectively and thrive professionally.

According to the U.S. Chamber of Commerce, “68% of U.S. workers say earning credential(s) outside traditional education degrees has helped them progress in their careers.”

We recommend that job seekers see how to create a strong resume work history section for tips on how to describe relevant skills developed in past roles.  

Increased internal mobility

Many businesses that use skills-based hiring also encourage employees to pursue opportunities for upskilling and reskilling to align their skills with the evolving needs of the organization.

This can involve participating in training programs, attending workshops or pursuing certifications to develop new skills or enhance existing ones.

In a conversation between McKinsey & Company partners Bryan Hancock and Brooke Weddle on the McKinsey Talks Talent podcast, Hancock notes: 

If you have more of a skills-based approach to creating those talent marketplaces, you can find talent where you might not have previously looked for roles in your own organization. This helps the company, and it also helps talent who want to have this more flexible approach to career development.Bryan Hancock, McKinsey & Company

Skills-based hiring can increase internal mobility by fostering an environment where employees are hired, promoted and transferred based on their competencies rather than solely on tenure or job titles.

How skills-based hiring benefits employers

Reduced time-to-hire

Skills-based hiring can help employers identify candidates who may not have followed a traditional career path but have gained relevant skills in other ways. 

This can expand the pool of potential candidates and reduce the time it takes to fill a role.

With a skills-based approach, employers can use assessments, tests or other tools to quickly evaluate a candidate’s abilities, allowing them to move more quickly through the hiring process.

Lowered recruitment costs 

Skills-based hiring allows employers to internally identify and assess candidates based on their skills, reducing the need to rely on external recruitment agencies and their associated fees.

By focusing on skills, employers can also develop a more efficient applicant screening process. 

For instance, they can save time and resources by using automated tools or assessments to evaluate candidates’ skills rather than traditional methods such as extensive interviewing. 

Of the 1,500 organizations surveyed by TestGorilla, 74% saw a reduction in cost-to-hire, with 31% of employers reducing costs by an average of 18% and 16% of employers reducing costs by 51% or more. 

Fewer mis-hires

When employers implement skills-based hiring practices, they can more accurately assess whether a candidate has the required skills to perform the job by focusing on competencies.

This reduces the likelihood of hiring someone who may have a great resume but ultimately lacks the necessary skills to succeed in the role.

TestGorilla’s The State of Skills-Based Hiring 2023 survey found that 88% of employers reduced mis-hires by incorporating skill assessments into their hiring processes.  

Increased employee retention

Skills-based hiring focuses on skills and competencies, aiming to match candidates with roles that align with their strengths and interests. 

The U.S. Chamber of Commerce reports that “95% of executives and HR professionals say individuals with only credentials earned outside of traditional pathways perform the same or better than individuals with only traditional degrees.”

When employees are in positions that capitalize on their skills, they are often more likely to feel fulfilled, engaged and satisfied in their work, increasing the likelihood that they will stay with the organization and continue to grow in their roles.

This is evidenced in TestGorilla’s The State of Skills-Based Hiring survey, which found that organizations using skills-based hiring saw an 89% increase in employee retention.

Improved diversity and inclusivity 

Shifting the focus from credentials to capabilities allows organizations to break down barriers that have historically limited opportunities for underrepresented groups, such as college degree requirements.  

Steelcase, a leading manufacturer and distributor of workplace furniture, adopted a skills-based hiring approach in 2022 as a part of its diversity, equity and inclusion (DEI) strategy.

The Every Child Thrives Foundation conducted a case study on Steelcase’s DEI initiative, reporting: “These efforts resulted in a recent cohort of new hires that include 55% women (up 2% from last year) and 30% racial or ethnic minorities.”

Skills-based hiring practices often include removing degree requirements entirely, which opens opportunities for job seekers with wide-ranging educational and professional backgrounds. 

Industries leading in skills-based hiring

Several industries have been at the forefront of adopting skills-based hiring practices, driven by the evolving nature of work, advancements in technology and changing talent demands.

Technology

Given the rapid pace of innovation and the constantly evolving nature of technology, companies in this sector have a strong incentive to prioritize candidates’ skills and abilities over traditional qualifications like degrees or credentials.

According to TestGorilla, “Tech companies are at the forefront of the shift to skills-based hiring, focusing on skills assessments for hard skills like computer programming and soft skills like critical thinking.” 

This trend holds true for remote, hybrid and in-person roles. TestGorilla’s recent survey, The State of Skills-Based Hiring 2023, found that 64% of remote companies use skills-based hiring, followed by 78% of hybrid companies and 57% of in-person companies.   

Browse in-person, hybrid and remote Computer & IT Jobs and Software Development Jobs from our partner FlexJobs to discover top tech companies that are hiring now.

Health care 

In the health care industry, skills-based hiring is essential for identifying candidates with the clinical expertise and specialized skills needed to provide high-quality patient care. 

The Covid-19 pandemic dramatically increased the demand for skilled health care workers such as Critical/Intensive Care Nurses and Registered Nurses.

A report from The Burning Glass Institute found that Registered Nurse job listings specifically requiring bachelor’s degrees declined by 5% compared to 2019.   

Intensive/Critical Care Nurse job listings requiring bachelor’s degrees decreased from 35% in 2019 to 23% in 2020. 

Explore Medical & Health Jobs on FlexJobs to find your dream role. We also recommend browsing our library of 800+ resume examples for expertly crafted samples to help you build a winning health care resume. 

Manufacturing 

Manufacturing and engineering sectors strongly emphasize skills-based hiring to meet the demands of advanced manufacturing processes and technological innovation. 

Employers in these industries seek candidates with specialized technical skills and often utilize skills assessments and hands-on evaluations to assess candidates’ capabilities.

As discussed by McKinsey & Company partner Bryan Hancock on the McKinsey Talks Talent podcast, one manufacturing company that implements skills-based practices is Boeing.

In the past, Boeing often filled cybersecurity roles with college graduates in computer science programs. While a computer science degree offered theoretical understanding, it did not prove helpful for the day-to-day tasks required on the job. 

To remedy this issue, Boeing developed a cybersecurity apprenticeship program to teach specific cybersecurity skills used on the job without requiring a four-year degree.  

See Manufacturing Jobs on FlexJobs to find your next role. We recommend using a professional resume template to eliminate the guesswork of designing your job-winning resume.

Companies committed to skills-based hiring

Skills-based hiring has gained popularity among companies of all sizes and various industries. Explore a few of the top companies that are committed to skills-based hiring practices.

Google

Google is known for its rigorous interview process that often focuses on assessing candidates’ problem-solving skills and technical abilities more than their academic credentials.

The Google hiring page notes, “Before moving into interviews, you may be required to take the Google Hiring Assessment, designed to measure workstyle skills required for success in a role at Google.”

One route job seekers can take to develop job-specific skills is through Grow with Google, an initiative launched by Google to help people acquire the skills they need to thrive in the digital economy.

Grow with Google provides online courses, workshops and events covering digital marketing, coding, data analysis, entrepreneurship and more. 

IBM

IBM implemented skills-based hiring to fill positions in emerging fields like artificial intelligence, cloud computing and cybersecurity.

Former Senior Vice President of Transformation and Culture at IBM, Obed Louissant, told Katelin Holloway of Lattice’s All Hands podcast:

As we got the results and started to gain more and more applicants by removing the degree and then the diversity of the applicants increased. And then after we hired, the performance overall was increasing, the diversity was increasing, the retention was getting better, we said, hey, there’s something here.Obed Louissant, former SVP of transformation and culture at IBM

IBM uses online assessments to determine if a candidate is the right fit. Their hiring page notes, “This stage in the process allows you to truly demonstrate who you are and what value you can bring to the role.”

Pay close attention to the required skills and competencies listed in the job description of your target role. This will give you an idea of what to expect in the online assessment.

Microsoft 

Microsoft emphasizes skills-based hiring through programs like the Microsoft Leap Apprenticeship Program, which provides on-the-job training to candidates without traditional degrees.

In 2020, Microsoft launched its Skills Initiative program, designed to empower individuals with the knowledge and capabilities they need to succeed in today’s technology-driven world.

One of the central components of the initiative is the Microsoft Learn platform, which offers a wide range of online courses, tutorials and certifications covering topics such as cloud computing, data science, artificial intelligence and software development.

Adapting to skills-based hiring as a job seeker

Get expert insight on how to adapt to the rise of skills-based hiring as a job seeker. See our job interview guide for additional tips and tricks from career advice experts. 

Build a skills-based resume 

Your resume should emphasize your proficiency in key skills relevant to the role you’re applying for, providing quantifiable achievements to demonstrate your capabilities whenever possible.

A sampling of 25 thousand resumes created on MyPerfectResume in 2023 identified the top ten most frequently used skills on job seekers’ resumes: 

  • Time management 
  • Customer service
  • Critical thinking 
  • Active listening 
  • Attention to detail
  • Verbal and written communication 
  • Teamwork and collaboration 
  • Microsoft Office
  • Problem-solving 
  • Project management

When applicable, incorporate these skills into your resume to stand out to hiring managers. Include a mix of hard skills and soft skills to demonstrate your full skill set. See our skills-based resume guide for additional tips from career experts.   

Additionally, there were the most frequently listed hard skills on the 2023 resumes sampled from My Perfect Resume:  

  • Project management 
  • Microsoft Excel
  • Python 
  • SQL
  • Javascript
  • C
  • HTML
  • Java 
  • CSS 

Prepare for skills assessments

Be prepared to participate in skills assessments or practical evaluations as part of the hiring process. 

Practice coding challenges, problem-solving exercises or other relevant assessments to ensure you’re ready to demonstrate your abilities effectively.

Network and seek referrals

Leverage your professional network and connections to uncover opportunities and seek referrals from individuals who can vouch for your skills and capabilities. 

Attend industry events, engage with potential employers on networking platforms such as Bold.pro and join professional associations. 

Demonstrate continuous learning 

Pursuing relevant certifications, completing online courses, or participating in workshops and training programs showcases your commitment to continuous learning and skill development. 

Highlight these achievements on your resume and during interviews to demonstrate your proactive approach to personal and professional growth.

Practice skills-based interview questions 

Prepare thoroughly for interviews by researching the company, understanding its culture and values and anticipating questions related to your skills and experiences. 

Use the STAR method (Situation, Task, Action, Result) to structure your responses and provide specific examples that illustrate your skills in action.

Implementing skills-based hiring as an employer

Skills-based hiring holds the promise of unlocking a diverse talent pool, allowing organizations to build dynamic teams that bring fresh perspectives and drive innovation. Explore expert tips on how to adopt skills-based hiring practices. 

Develop skill-based job descriptions

Begin by identifying the essential skills and competencies required for each role within the organization. 

Collaborate with hiring managers, team leaders and subject matter experts to create a comprehensive list of technical skills, soft skills and other attributes necessary for success in each position.

Emphasize the importance of skills over credentials or years of experience to attract a diverse pool of candidates.

Retrain hiring team members

Review and revise recruitment processes to prioritize skills assessment at every stage. Incorporate skills-based questions and assessments into job applications, screening interviews and technical evaluations to ensure candidates’ abilities are thoroughly evaluated.

Provide training and guidance to hiring managers, recruiters and interviewers on conducting skills-based interviews and evaluations. 

Educate them on the importance of focusing on candidates’ abilities and competencies rather than relying solely on education credentials or traditional markers of success.

Utilize skills assessments

Implement skills assessments or simulations to evaluate candidates’ proficiency in key skills relevant to the role. 

Leverage technology 

Explore technology solutions, such as applicant tracking systems (ATS) with built-in skills assessment capabilities or specialized skills assessment platforms, to streamline the skills evaluation process and enhance candidate screening and selection efficiency.

The White House’s Executive Order on Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates notes that hiring managers can shift the criteria they provide ATS systems to avoid disqualifying qualified candidates simply because they do not have a four-year degree. 

The executive order includes the following guidance: “Expanding the talent pool will require revisiting the relevance of such filters and recalibrating them so as to eliminate those that act to exclude qualified, non-degreed candidates for reasons other than educational attainment level.”

Promote internal mobility

Encourage internal mobility by identifying and developing existing employees’ skills to match evolving job requirements. 

Create pathways for career progression and provide opportunities for upskilling and reskilling to ensure employees remain competitive and adaptable.

Key takeaways

  1. Skills-based hiring is a recruitment approach that focuses on assessing candidates based on their specific skills and competencies rather than primarily on their academic qualifications or previous job titles.
  2. This approach can help reduce bias in the hiring process by focusing on objective criteria rather than subjective factors such as educational background or personal characteristics.
  3. Skills-based hiring benefits employers and candidates by enabling better alignment between job requirements and candidate capabilities, facilitating more efficient hiring decisions, and promoting diversity and inclusion in the workforce.

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