DS Cohen & Associates
The trend is clear: a degree is no longer the golden ticket to landing your dream job; it’s all about the skills you bring to the table. Over the past five years, the practice of skills-based hiring has gained traction, emerging as the latest trend in recruitment. A study of 51 million job postings reveals that many companies are moving away from degree requirements for numerous roles, a trend that the Society for Human Resource Management (SHRM) has advocated at its conference for the past few years. But is this really something new? Doesn’t it sound logical to begin with? With the rapid evolution and dynamic development of technology, the skills demanded today might very well be obsolete in six months.
Once dominated by educational qualifications, the hiring landscape has changed, especially since the Great Recession of 2008-2009. This economic downturn prompted many organizations to rethink traditional hiring criteria, instead favouring skills-based models. This trend is particularly noticeable in middle-skill jobs, where actual abilities increasingly outweigh formal degrees.
Past Meets Present
Seventeen years ago, a fresh marketing MBA graduate was puzzled by interviewers’ insistence on her signing non-disclosure agreements and preparing detailed presentations based on provided materials. To her, it seemed like an attempt to extract unpaid labour. But in reality, these were real-world skill tests. While frustrating for her, these exercises ultimately led to job offers, underscoring the timeless value of practical skills, irrespective of how they are acquired.
Today, an MBA is recognized for what it is—and what it is not— having the requisite skills trumps the methodology of their acquisition.
Historical Parallels
The concept of hiring based on skills is not a novel invention. In the Middle Ages, apprenticeships were commonplace. Master artisans trained young people through hands-on experience, prioritizing practical skills. Today’s skills-based hiring retains this focus on real-world abilities but has incorporated modern assessments and technologies to evaluate candidates more effectively.
The highly competitive global labour market and the push for a more diverse workforce further drive this shift. Companies like IBM recognize the need for employees with a continual learning mindset, acknowledging that the half-life of skills is shorter than ever. However, will companies address the need to integrate time for continuous learning into the job description? Failure to provide employees the time to stay current through continuous upskilling means that the skills they were hired for might quickly become outdated. There remains a catch-22 for employees to pursue professional development as it is still seen as superfluous by some traditional employers.
Skills-Based Hiring: A New Focus or a New Set of Skills?
The rise of skills-based hiring is not entirely a novel concept but rather a shift back from traditional credentials to actual skills and knowledge capability. This approach has gained momentum in recent years as companies seek to adapt to a rapidly changing job market and address the limitations of traditional hiring practices.
The Benefits of Skills-Based Hiring
Skills-based hiring offers numerous advantages for both employers and employees:
- Diverse Talent Pool: By eliminating degree requirements, companies can access a broader and more diverse range of candidates. This approach helps mitigate biases related to educational background and opens opportunities for individuals who have followed non-traditional paths.
- Improved Hiring Efficiency: Skills-based hiring can streamline recruitment by focusing on candidates’ skills and technical abilities, leading to faster and more accurate hiring decisions. Some companies have reported a 40% improvement in time-to-hire through this method.
- Enhanced Workplace Performance: Skills-based hiring can lead to better organizational performance and retention rates. New hires selected for their specific skills are more motivated, coupled with a slightly longer tenure than traditional hires. However, it is critical to consider if the hiring process also includes an assessment of fit to company-specific behavioural competencies. Nothing exists in a silo within the hiring and retention processes.
Potential Pitfalls and What Might Be Missed
One significant rationale for moving to skills-based hiring is the opportunity to make more informed, fact-based hiring decisions, potentially leading to a more diverse workforce. However, ensuring retention and accountability requires employees to feel a sense of belonging and not feel like strangers in a strange company. Building an environment of belonging is difficult when you have a blend of people with conflicting values and opposing beliefs. Trust issues can arise when employees do not align with the company’s core values. Even if they respect each other as individuals, they may not fully trust one another, impacting effective teamwork and accountability.
The Misconceptions and Challenges
Some envision hiring for skills alone will create a more innovative work culture. However, this perspective overlooks the importance of values in defining a company’s culture. Values delineate right from wrong, and a lack of alignment can result in unpredictable decision-making and unethical behaviour, all for the sake of results. While skills-based hiring has its merits, it also presents several challenges:
- Overemphasis on Specific Skills: Overemphasizing certain skills can neglect other critical contributions, potentially creating a two-tier class of employees.
- Narrow Focus: Hiring individuals with a narrow skill set may overlook candidates who bring valuable insights and broader perspectives.
- Bias Misconception: The belief that hiring for skills alone eliminates bias is a misconception. The hiring manager will always have predispositions towards certain people, influencing their selection.
- Rapid Evolution of Skills: With the rapid evolution of specific technical skills, what is innovative today may be outdated tomorrow. s Accurately assessing high-demand, high-tech skills is an ongoing challenge not to be overlooked.
- Organizational Mind Shift: Will a focus on skills lead to the abandonment of hiring for behavioural fit?
- Complexity in Assessment: Measuring and validating skills can be more complex and time-consuming than evaluating resumes. Effective implementation requires thorough skills mapping, skills taxonomy, and reliable assessment tools. This complexity can lead to subjective assessments, making consistency and fairness in the hiring process challenging.
- Candidate Perception: Since skills assessment processes are new to many, some candidates might find these evaluations off-putting and might not show up for the interview.
Integration with Existing Systems
Integrating skills-based hiring into existing HR processes and data systems presents its challenges. The introduction of many human resource information systems (HRIS) continues to be a struggle. HR professionals are typically not tech-savvy, so adapting to new technology remains difficult. Effective integration requires HRIS platforms that are open-source and agile enough to handle rapid changes. Moreover, if the adoption of skills-based criteria necessitates additional resources and HR departments are already understaffed, so will they be capable of doing more with less?
Conclusion
Skills-based hiring represents a significant shift in recruitment strategies. The core difference lies in setting up skill assessments as a condition for proceeding to the interview phase. Degrees no longer serve as the preliminary evaluation criterion.
While a skills-based approach offers numerous benefits and can lead to a more diverse and efficient workforce, it also comes with its own set of challenges. Companies that succeed in integrating skills-based hiring practices will likely gain a competitive edge, fostering a skilled and adaptable workforce ready to meet future challenges.
A two-part interview process is imperative to ensure that skills-based hiring is beneficial. This process should begin with a skills and knowledge assessment to confirm the candidates can handle the job’s technical requirements. The second part should involve a structured behavioural interview to evaluate whether the candidate will apply their skills and knowledge effectively within the company’s cultural context. When combined, this method ensures hiring individuals who are not only capable but also competent.
Moreover, once a person is hired, companies must allocate time for continuous learning in this rapidly evolving world of knowledge. Providing opportunities for on-the-job upskilling is vital for business continuity, and training budgets should be safeguarded against budget cuts.
A Final Thought:
While many companies have removed college-degree requirements from job postings to widen their talent pool, are they implementing skills-based hiring practices effectively? Are firms genuinely onboarding individuals without degrees in significant numbers? If the proportion of hires with degrees remains substantially higher despite the removal of degree requirements, this could indicate that the shift towards skills-based hiring is more a public relations campaign than a substantive change.
In closing, while the movement toward skills-based hiring appears fresh, it taps into age-old practices of valuing tangible, applicable skills. The future will show whether this trend can overcome its challenges and deliver on its promise of a more effective, merit-based hiring strategy. However, as with any transformative initiative, its success won’t hinge on adopting advanced tools and assessments. It will require a holistic shift in how organizations perceive value, skills, and culture. Only those who can intertwine these elements seamlessly will genuinely benefit from the potential of a skills-based hiring paradigm.
Now is your turn to contribute your perspective on the discussion on LINKEDIN.
David Cohen is completing his second book on how to hire for fit to values/culture. His first book is called The Talent Edge. He has conducted workshops globally on Structured Behavioural Interviewing. For more information on the workshop, please contact DAVID.
