What most people get wrong about skills-based hiring

Look at any 2024 trends report, analyst podcast, or vendor webinar and you'll find some mention of skills-based hiring. But this approach has been around for almost 30 years. So why are so few companies getting it right?  

The uncomfortable truth about skills-based hiring

For the last few years, TA teams have been battling three major challenges:

• Skills shortages have been getting worse by the day
• Meeting diversity targets remains a challenge
• And the bar for candidate experience has continued to rise

And that’s before the AI-enabled candidate made all of these issues even worse. 

It’s a minefield. And most TA teams are now wrestling with how to navigate this brave new world of recruitment.

There’s one approach featured in every trend report and on every TA team’s lips as the answer: skills-based hiring.

But as Josh Bersin writes:

“We’re now reaching a point where we have dozens of examples of companies that have done this [skills-based hiring] in a pragmatic way. And hundreds of examples of companies that haven’t done it in a pragmatic way who are going to be frustrated.” 

Why are so many companies getting it wrong? 

Skills taxonomies and AI aren't the answer

Skills-based hiring came out of a strategic shift to becoming a skills-led organisation. This was a response from leadership teams who recognised that for their organisations to adapt to rapid digitisation and automation, they needed to embrace a new approach to talent management. 

The concept of becoming a skills-led organisation is a simple one: map out what skills we have and what skills we need –– then structure our talent function to develop talent with the right skills, move around talent with the right skills, and, where necessary, acquire talent with the right skills. 

But the transformation to becoming a skills-led organisation is a lot more complex: it requires an agreed definition of a skill and, with that, the development of a skills taxonomy which everyone agrees on (which in itself is no mean feat, even with AI matching software), and then there’s the ‘simple’ task of the whole HR organisation redesigning and aligning their processes to match this approach. 

As any TA team will know, not one of these things is easy. 

This is where the current approaches to skills-based hiring fall down, revealing yet more issues:

1. There is no universal definition of what a skill is or even a universal naming convention for different types of skills  
2. Agreeing on which skills are most important and how to determine a level of competency in them is a real challenge.
3. Many hard skills are in short supply so trying to use AI to hire for exact skill matches is just going to make talent shortages worse
4. Hard skills date quickly –– the skills we require today won’t be the same tomorrow
5. Finally, many skills-based hiring approaches rely on asking people which skills they have… not truly evaluating how well they can actually demonstrate them 

It’s no wonder that adopting skills-based hiring can feel overwhelming — like trying to hit a fast-moving target.

Large-scale transformation isn’t easy. But according to the experts, there is a better way to get started with skills-based hiring. A clearer, more pragmatic approach that reduces the complexity and gives TA teams a clear plan for overcoming their biggest challenges in 2024. 

What an effective skills-based hiring process actually looks like 

Based on advice from the TA Disruptors community, and our perspective based on a decade of experience, a new approach to skills-based hiring must be underpinned by two core principles:

1. We must evaluate candidates based on their core strengths and ability to acquire new skills
   
   In order to guarantee that a candidate will be able to survive and thrive as tech continues to evolve at a rapid pace, we also need to understand a person’s core strengths and capabilities –– like their natural level of resilience or adaptability ––  and critically, their ability to acquire new skills in the future. 
   
   Only if we understand whether a person has what it takes to continue to learn, adapt, and grow can we understand whether they’ll be able to help our organisation navigate the ever-changing world of work.
   
   
2. We must give candidates a platform to demonstrate their skills, not just tell us they have them
   
   The pitfalls of selecting a candidate based on their degree or qualifications alone are well established. But we also have to bear in mind the differences each person’s make-up has on the way they ‘self-report’ their strengths too. For example, women are more likely to underestimate their capabilities vs men in a self-report scenario. 
   
   This leaves TA teams with just one option. 
   
   To avoid mis-hires and maintain the efficacy of our process, TA disruptors need to ensure that every step of the hiring process –– from sifting to interview evaluation –– allows candidates to showcase their abilities, not just talk about them. 
   
   

Based on the above findings, we believe an effective skills-based hiring process must adhere to the following definition:

Skills-based hiring helps companies discover whether a candidate has the ability to acquire new skills and/or has some of the relevant skills now. 

An effective skills-based hiring process must: 

1. Evaluate a candidate based on their current soft-skills, hard-skills, and –– critically –– their ability to acquire future skills –– rather than their past experience 
2. Give candidates an opportunity to show they have the potential to succeed in a role, rather simply tell you about it   

But here’s the million-dollar question: how do you quickly and easily evaluate whether candidates can acquire new skills in the future? And then what does an end-to-end skills-based hiring process consist of?

Introducing…

The pragmatist's playbook for skills-based hiring: helping TA leaders navigate a new era of recruitment 

We’ve combined a decade’s worth of our own experience in helping companies move away from experience-based hiring and towards potential-focused hiring, with advice from disruptive TA leaders at the forefront of our industry, to bring you the most practical, pragmatic playbook on skills-based hiring published to date. 

This playbook is designed to give you research-backed, practical, validated advice curated from the likes of Siemens, Molson Coors, and the Department of Education. It’s here to help you achieve three goals:

1. Understand the critical steps required to adopt skills-based hiring –– we’ll cover what most people miss out, how to be successful without having to map your process exactly to a complex skills taxonomy, and how to ensure you’re able to capture an authentic picture of a candidate’s true capabilities and skills  
2. Dive into how to practically move away from experience-centric hiring towards a more straight-forward version of skills-based hiring –– we’ll explain the steps required to update your entire hiring process in a way that uncovers candidates' true potential: from redesigning job specs to upgrading your interview process 
3. Get actionable tips on how to avoid common pitfalls and roadblocks along the way –– we’ll share tips on how to align everyone from your CPO to your CFO in what good looks like, how to engage your hiring managers, and how to move from a pilot to an organisational wide roll-out 

Disclaimer: this is not like other skills-based hiring playbooks you’ve seen. Instead of giving high-level advice like “you need to engage hiring managers”, we’ll give you practical steps on how to implement new processes –– and in some cases, offer templates –– to help you get things done. So if you’re ready to uncover information that really moves the needle, let’s dive in.