What employers are getting wrong about skills-based hiring

Increasingly, companies are prioritising skills over experience when assessing candidates but results show that simply removing degree requirements isn’t sufficient

Skills Based Hiring

As companies struggle to fill skills gaps and strive to diversify their workforces, employers are experimenting with new hiring methods.

For some, this has meant removing degree requirements. Elsewhere, John Lewis has started publicly sharing its interview questions and the brewer Carling has removed CVs from the application process entirely for certain roles.

All of these changes are part of a broader recruitment trend – the shift to skills-based hiring. Harry Gooding, director of skills and learning at recruitment firm Hays, defines this as: “A recruitment method which brings a person’s skills into the limelight, while other factors, such as their qualifications and experience, take a back seat.”

A 2024 survey of hiring managers by video recruitment platform HireVue found that 70% of hiring professionals are now prioritising skills assessments over résumés.  More than a third (36%) said they had made the change to a skills-first approach in order to reach diversity and inclusion goals.

“Evidently, more and more employers are reconsidering the attributes that are likely to make a prospective employee an asset to their organisation,” Gooding adds.

Skills over schools

One of the most common methods of introducing skills-based hiring is to remove degree requirements. Almost half (45%) of employers surveyed by Hays in its UK 2024 Salary and Recruiting Trends Report say it no longer matters whether a job applicant has a degree. 

The hope is that by removing the degree requirement, employers are opening up opportunities to people from a wider socioeconomic background. “The cost of higher education can hold back young adults from securing employment opportunities and achieving their potential, so shifting the focus to skills provides a necessary alternative to this costly route into the world of work,” Gooding explains.

But despite these good intentions, many attempts to introduce skills-based hiring have not yielded the desired results. And, in some cases, they’ve had the opposite effect. 

For all its fanfare, the increased opportunity promised by skills-based hiring was borne out in not even one in 700 hires

Companies that introduced skills-based hiring only increased the share of people without a degree in their workforce by 3.5 percentage points, on average, according to a 2024 study by The Burning Glass Institute and Harvard Business School. “For all its fanfare, the increased opportunity promised by skills-based hiring was borne out in not even one in 700 hires last year,” the report’s authors asserted.

The main issue is that a large proportion (45%) of companies approached the change “in name only” and made no meaningful changes to their hiring behaviour, beyond removing degree requirements from their job postings. While 20% saw short-term improvements to accessibility, in the long run they ended up hiring a smaller proportion of people without a college education than before the changes.

Stephen Chu is the chief legal and people officer at US-based enterprise education provider Instride. He believes many organisations are merely paying “lip service” to the idea of a skills-based approach to recruitment. In doing so, many are creating an “invisible glass ceiling” for candidates. 

“Even though these businesses are not explicitly requiring college degrees, if the hiring managers and the recruitment teams are not aligned with the strategy, they will continue to hire people with college degrees because you haven’t actually done anything to introduce skills-based hiring into the mix,” he says.

Instride made this mistake itself when first switching to a skills-based approach. Chu says: “I quickly realised, three to five months after removing degree requirements, that the number of people we were hiring without a degree wasn’t changing and we needed to do more.”

How to go skills-first

Instead, companies need to make an individual’s skills an integral part of all stages of the hiring process. At Instride, this meant first creating a skills taxonomy. This is essentially an inventory of all the skills present within an organisation – including both hard and soft skills – and a list of those required to run the business successfully. 

This allows you to identify the core competencies that are already present within the business and to easily spot the skills gaps that can be closed, either through training or recruitment. 

Once a skills taxonomy is established, companies can set about breaking down each role within the business into a list of essential skills that are crucial to performing each job effectively. Companies then need to recruit based directly on these skills and, if any recruitment metrics are being used, these need to be updated to reflect the changes. 

This is something the entire HR department needs to be focused on

Nikolaz Foucaud, EMEA MD of online course provider Coursera claims businesses need to undergo a complete “perception and culture shift” when making this change. “To get skills-based hiring right, leaders need to develop a holistic people strategy,” he says. “This helps outline the right people for the job from the get-go, based on how they will integrate into roles and responsibilities, rather than just the credentials of their CV or career history.”

It can be good practice also to list which experiences or achievements will provide good evidence of these skills in the job description, Chu adds, especially when recruiting young people or new entrants to the workforce who may not have much prior experience. “As a candidate, this can help you to connect these skills to something you’ve done directly in your prior experience,” he says.

Another, often forgotten piece of the skills-based puzzle is continuing to use the same approach throughout the entire employee lifecycle. “The entire HR department needs to be focused on this,” Chu stresses. This means using skills assessments as the basis of performance reviews and referring to the organisation’s skills taxonomy when organising learning and development opportunities.

To remove this burden from other people in the HR department, Coursera has employed a skills specialist to help its employees identify their personal skills gaps and track their progress. Although not crucial, it is something Foucaud recommends other companies copy.

Common mistakes

While skills assessments can be a useful tool and are often used by skills-first recruiters, they are unlikely to provide the desired results in isolation. “You have to always evaluate what is the best mix of data that you’re going to get during the evaluation period,” says Chu. “If there is a specific skill that is best judged through an assessment, then do so, but don’t employ skills tests just for the sake of it.”

With a focus on skills, it can also be easy to forget the other elements that make up a good recruit. “There are so many attributes of a person that are important to consider when making a hiring decision,” Chu says. “Culture fit is still really important for us but this can’t be assessed through skills tests alone.”

The focus on skills has made the recruitment discussion binary, according to Foucaud. “Perceptions around degree requirements tend to fall into two camps where either everyone needs a degree or no one does,” he says. “But neither is true.”

It will ultimately be up to each business to decide the most suitable and effective hiring approach for the role in question and there will remain certain professions which always require a degree.

Skills-first may not be the right approach for every employer. But for those wanting to open up opportunities to a broader array of candidates, it can be an effective way to widen the talent pool – as long as a holistic approach is taken.

How to get skills-based hiring right

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