Skills-based hiring needs no introduction. Everyone is talking about it – from SHRM, Forbes and Fortune to Deloitte, CNN, and Harvard Business Review – and data from our latest State of Skills-Based Hiring report shows that 81% of employers are using skills-based hiring, making it the #1 way to hire. In contrast, I probably do need an introduction. This is my first guest post for EU-Startups and you might be wondering what makes me qualified to be talking about this topic in the first place.
In 2020 I started TestGorilla with my co-founder Otto Verhage. TestGorilla’s origin story is simple: I was running a social enterprise called Sukhi with my wife, and we needed to hire people. We were getting an insane number of applications for a small business – up to 2,000 CVs for one job. Piles and piles of them on the table, and no idea how to find the best talent, let alone make the process fair.
We began making our own little tests in Excel – literally hand-made. We weren’t hiring experts, we didn’t want to spend time on this, and we weren’t very good at it. But still, it worked better than the resumes. I started looking for a solution that tests the skills and values we’re looking for, and I couldn’t find one. I knew I couldn’t be the only one having this problem, and I was amazed a solution didn’t exist. In founding TestGorilla, I set out to create one.
Skills-based hiring just makes sense
I think this is a good example of the biggest reason why skills-based hiring is now the #1 way to hire. And that reason, I think, is really simple. The reason is that it just makes sense.
It makes total sense to hire people based on how their skillset aligns with the skills needed to be successful in the role you’re hiring for. Figuring out how to do that really well is a different conversation and there’s lots to consider – do you know who you need to hire, and which skills you need them to have? Do you have a valid and reliable way to identify and validate those skills? Do you know when to pay attention to the details on a resume? (I’ll cover all of that next time!) – but this much is clear: It makes sense to define the skills you really need and then find them.
Hiring for experience doesn’t always make sense because you can do something for a long time and not necessarily be good at it. Hiring for qualifications doesn’t always make sense because passing an exam in a subject or going to a top university doesn’t equate to being a successful hire who can ace the job. Sure, there’s a place for experience and qualifications sometimes. But it always makes sense to hire for skills.
A way to hire (and retain) better people
Truly: if you get skills-based hiring right, you hire better people than if you use experience and qualifications to make those early hiring decisions. I know because the data says so (90% of employers reduce mis-hires and increase retention when they hire for skills), and also because I’ve seen it happen.
I have enough experience with resume-based hiring to know that ‘needle in a haystack’ feeling: you know they’re out there somewhere, but have no way of knowing who those extremely talented people really are. It’s daunting, and it becomes all too easy to dismiss people for reasons that are biased and don’t make sense. When you give these applicants a way to show, rather than tell, their skills, you give those needles a chance to shine bright.
Your talent acquisition team and hiring managers will thank you for committing to skills-based hiring
Hiring the right people is a very, very difficult job, and it’s absolutely crucial to the success of any organization. At the same time, HR and talent acquisition leaders often end up left out of strategic planning processes for hiring.
Research shows that only 32% of HR execs are involved in strategic workforce planning. 42% believe their company has no workforce plan at all and 46% say “they’re running around to keep up.” Alongside this, 58% of companies feel skills shortages are impacting their business plans, and more than seven in ten believe they must transform their talent practices to grow. The pressure is on to end skills shortages, but companies are hesitant to pause, re-evaluate and re-build their hiring processes around skills – even though it’s totally worth it.
Most of the buy-in for skills-based hiring is already there (in a survey of over 1,000 employers, 95% of them agreed that the future of recruitment is skills-based); TA teams know that. What’s missing is the openness and commitment to real change. Commit to that journey, take your TA people with you (or let them lead the way!) and you won’t regret it.
… and I mean really commit
I mentioned earlier that there’s lots to consider if you want to do skills-based hiring really well, and although skills-based hiring is the #1 way to hire, I’m not convinced that anywhere near that number of employers are doing it effectively or committing to it seriously.
Skills-based hiring has been tokenized to an uncomfortable extent. You see a lot of pronouncements without practice, and I think a lot about how many employers seem to implement really surface-level stuff and call it skills-based hiring. Removing degree requirements from job descriptions only to use the degree qualifications listed on applicants’ resumes as a way to shortlist them anyway, for example. This is the pattern for 45% of companies that drop degree requirements and aren’t effective. Simply removing degree requirements is not a commitment to skills-based hiring.
So, what does a commitment to skills-based hiring look like? At its core, it’s about thinking on recruitment in a completely different way and building hiring practices that include a way to identify and validate skills reliably and fairly. Pre-employment testing is crucial here, as is putting the time and effort into defining which skills your business or team really needs. Give your teams the time and resources to learn and build effective skills-based processes together. To embrace this change in order to unlock the full potential of our greatest asset: Our people, their potential, and their skills.
