Skills-Based Hiring Requires Commitment to Change

​A growing number of employers are showing interest in skills-based hiring—moving beyond education and experience requirements to focus on the skills match between candidates and roles.

More employers are becoming aware that assessing candidates on their abilities and potential, rather than degrees and job histories, can provide instant economic opportunities for millions of job seekers, help relieve talent shortages, increase diversity and strengthen internal mobility in the workplace.

"Most of the employers we talk to are highly receptive to this message, and they recognize that with the current talent shortage, skills-based hiring is the best approach for a wide range of roles with significant high-volume need and higher-than-average turnover," said Angela Briggs-Paige, SHRM-SCP, head of people and culture at the nonprofit Opportunity@Work. The Washington, D.C.-based organization works to expand professional career access for people without college degrees.

Emily Field, a partner at global management consulting firm McKinsey & Co., said skills-based hiring is "one of the main topics that I hear CEOs and CHROs asking about. They continue to face a skills gap and a talent shortage, and at the same time, recruiting technology is screening out more than half of the applicants due to [their not meeting] education and experience requirements."   

The SHRM Foundation has made educating employers about the use of skilled credentials in talent acquisition a priority.

SHRM Foundation President Wendi Safstrom said, "While most employers agree skills-based hiring is valuable, few employers have made changes to their practices. This keeps qualified talent on the sidelines and businesses from thriving. Even worse, the talent employers are missing are people from historically underrepresented and untapped groups."

Since the 1980s, many job postings have reflexively required college degrees, weeding out qualified candidates. A 2017 study led by researchers at Harvard Business School found that more than 60 percent of employers rejected candidates who were qualified in terms of skills or experience but did not have a college degree. However, current data shows employers have reduced degree requirements since then, and the number of job postings without degree criteria has risen, with job ads increasingly listing technical and soft skills instead.

One-fifth of current U.S. job listings on LinkedIn don't require a four-year degree, an increase of more than 30 percent over the past six months. Since 2019, the share of recruiter searches on LinkedIn filtering for skills has grown by 25 percent; recruiters are now 50 percent more likely to search by skills than they are to search by years of experience.

"McKinsey research indicates that a growing number of organizations are removing college degree requirements from job postings and coming up with other ways to determine job readiness," Field said. "We're seeing this especially in technology and managerial roles. This requires rewriting job descriptions and really thinking about what skills are truly needed on day one and what can be trained for on the job and which skills do not matter at all."  

Companies such as Google, IBM and Walmart have been praised for instituting skills-based hiring practices. Meanwhile, the governors of Alaska, Maryland, Pennsylvania and Utah have eliminated college degree requirements for many jobs in their states' governments.

"For those companies wary of adopting skills-based hiring, one of the biggest barriers is the false narrative around workers without college degrees," Briggs-Paige said. "Managers often overestimate the percentage of the workforce who hold degrees. This misperception, coupled with the notion that low-wage means low-skilled and that no degree means no skill, can inhibit mobility for millions of workers without degrees."   

Briggs-Paige said that skills-based hiring works best with entry-level and midcareer positions that don't require specialized training or credentials. Opportunity@Work coined the term "STARs," an acronym for Skilled Through Alternative Routes, to characterize these workers.

The momentum for skills-based hiring is clearly growing, but how can employers get started with this new approach? Hiring for skills will require a mindset shift in which candidates are "screened in" instead of "screened out," necessitating new ways to define roles, write job ads, evaluate candidates, manage performance and develop employees.

Change Management Faces Obstacles

The first—and most important—step to implement skills-based hiring is to shift thinking. "The change management piece will be the hardest part," Field said.

Any significant workplace culture change must start with leadership, from executive champions and leaders in HR and talent acquisition, to hiring managers who will ultimately be responsible for making it happen. 

"Think about a hiring manager—they are trying to fill a job, often an immediate need, and their goal is to find someone successful in the role," Field said. "The reality is that hiring managers are not talent assessment experts. So it's important for recruiters to guide hiring managers along the journey and help them understand the 'why' of skills-based hiring: that it will get them highly qualified talent in the role when they need it."  

Safstrom outlined three key barriers that keep employers—particularly small and midsize ones—from adopting skills-based hiring, even when they say they want to:

• Existing systems must be overhauled, which can be challenging and expensive.
• There's a lack of trust in partners. "Technologies, vendors and credentials are flooding the space, but there is no complete mechanism for vetting quality, regulating product or inspiring trust," she said.
• Scaling is hard. "Making large shifts in fundamental ways of hiring is falling to overworked HR leaders who often must create solutions alone, instead of in concert with others," Safstrom said.

However, building and investing in centralized, enterprise-level solutions can make scale possible and reduce risk. "Aligning employers, service and tech providers, educators, policymakers, and funders can drive practice and change," Safstrom said.

Employers can do the easy things immediately, such as broadening sourcing channels and removing college degree requirements from job ads. But a skills-based approach will also require a long-term plan that encompasses an organization's entire talent acquisition and management systems.   

Match Skills to Roles

To get skills-based hiring right, employers will initially need to develop a skills strategy.   

"First, you need to understand the skills that your business needs," said Jennifer Shappley, vice president of global talent acquisition at LinkedIn. "Then understand what skills your employees have, or that they can develop, and what skills you need to hire for so that you build your talent strategies accordingly."

HR, working closely with hiring managers, will need to conduct a skills analysis for each role to understand the core skills needed on day one and the ones that can be taught later, as well as a matrix for all roles to determine which skills are essential for progression in the organization.

"When you know which skills are most predictive, you know what is needed to get started and what can be trained," Field said. "For example, a plant shift manager needs to have a process improvement mindset [and] needs to be wired to think that way. But they can learn the specific process improvement practices of that company on the job."

Evaluate for Skills, Not Personality

Traditionally, interviewers have relied on candidates' past performance to predict future performance. But evaluating candidates' soft skills through structured behavioral interviewing and building objective assessments for hard skills, such as coding tests or writing assignments, are better ways to evaluate candidates based on their skills, experts said.

Recruiters and hiring managers will need to be trained on how to evaluate for skills, Briggs-Paige said, while applicant tracking systems that screen out qualified people will need to be modified. Using valid skills assessments will also be important.

Janice Burns, chief people officer at Degreed, a learning experience platform in San Francisco, said most assessments used today are psychometric assessments that measure personality and aptitude, not skills. This gets into dangerous territory, since employers are not in the business of developing or upskilling someone's personality, she said.

"While aptitude is not technically biased, aptitude preference as a basis for making employment decisions does carry bias," Burns said. "Skills assessments are very different in that they align with what people need to do and how well they need to do it in order for them to perform a task or job. Skill requirements should be based on the work that needs to be done and/or task that needs to be completed."

Assessments are one part of the solution, Briggs-Paige said, "[b]ut skills credentials can also help hiring managers be comfortable hiring people without degrees."

There's a lot of work happening right now to develop and promote skilled credentials, including efforts by the SHRM Foundation.

Upskill on the Job

Continuous skills development is the final component of a skills-based talent management approach. Employers will be responsible for turning potential into performance, stepping in and helping employees acquire the skills they need to succeed. Organizations can provide professional development resources, opportunities and support from the first day on the job to show new hires that they're invested in their success.

"Upskilling is critical to getting skills-based hiring right," Field said. "Upskilling does not just mean providing classroom training on a subject. It means learning on the job, learning from the manager in the flow of work."

According to Briggs-Paige, skills development programs show that many low-wage roles require skills similar to middle-wage roles, and middle-wage roles require skills used in high-wage roles. "Managers realize that most workers already exhibit the core skills needed to move into higher roles, whether they have a degree or not," she said.

Fortunately for employers, an intentional upskilling focus from the onboarding stage through training and promotions will also likely boost internal mobility and increase retention, as surveys show that most employees say they are more likely to stay with a company that invests in their career.