Skill-based hiring aims to identify the most qualified and competent candidates who possess the necessary technical or soft skills to perform the job successfully, rather than hiring solely based on their educational qualifications or previous work experience. By emphasizing skills, employers can diversify their hiring pool and provide equal opportunities for candidates with different backgrounds and experiences to showcase their abilities.
The "Dismissed by Degrees" study conducted by consulting firm Accenture in 2017 found that many business leaders view a college degree as a proxy for a candidate's hard and soft skills, leading to a limited pool of viable candidates. Moving away from degree-based hiring to a competency-based approach can open up new pipelines for organizations struggling to find talent. Introducing objective means to evaluate an applicant's aptitude can provide employers with a more complete profile of a job seeker's qualifications.
In the technology sector, several companies have already recognized the drawbacks of degree bloat and shifted towards skill-based hiring. Tech giants like Accenture and IBM run apprenticeship and school leaver programs that enable employees to learn on the job and specialize in areas of their choice. Skill-based hiring also offers opportunities for people to transition between industries or return to work.
The U.S. government has also started rethinking the significance of formal degrees in hiring processes. In June 2020 and January 2021, the White House announced restrictions on the use of educational qualifications while hiring IT professionals, favoring a skills-based approach instead. The U.S. Office of Personnel Management (OPM) issued guidelines on adopting skill-based hiring practices to fill federal government jobs in May 2022. Traditionally, the government relied on formal education or self-assessed skills related to educational requirements to determine a candidate's eligibility for hiring.
OPM Director Kiran Ahuja stated in a news release that "by focusing on what an applicant can do, and not where they learned to do it, skills-based hiring will expand talent pools by making it easier for applicants without a bachelor's degree to demonstrate their skills and help remove barriers to employment for historically underrepresented groups."
Research and studies show the following benefits of skill-based hiring for any organization:
Reducing employee turnover: Skill-based hiring can reduce employee turnover rates by up to 39%, according to a report by the Society for Human Resource Management (Source: "The Advantages of Skill-Based Hiring" in August 2017). This is because employees who are hired based on their skills are more likely to feel confident and satisfied in their role, which can lead to increased job retention.
Increasing productivity: A study by Harvard Business Review found that employees hired based on their skills are up to 30% more productive than those hired based on their educational qualifications or work experience (Source: an article published by Harvard Business Review titled "21st-Century Talent Spotting" in June 2014). This is because they possess the specific competencies needed for the job, allowing them to perform tasks more efficiently.
Improving diversity and inclusion: Skill-based hiring can help increase diversity and inclusion in the workplace by providing equal opportunities for candidates from different backgrounds and experiences to showcase their abilities. According to a report by McKinsey & Company, diverse companies are 35% more likely to outperform their competitors (Source: A research report published by McKinsey & Company titled "Diversity Matters" in January 2015.)
Saving Costs: According to a study by Deloitte, companies that implement skill-based hiring can save up to 50% on recruitment costs due to reduced turnover rates and more efficient hiring processes. (Source: A research report published by Deloitte in 2017, titled "High-Impact Talent Acquisition: Key Trends and Best Practices.")
Skills based hiring also opens up pathways to well-paying careers for individuals who may have been overlooked in the past due to strict degree requirements, helping to reduce inequity and create a more diverse workforce. More than 60% of Americans do not have a bachelor degree. When looking at the Black and Latino communities, that rises to over 80% without a degree. By focusing on skill-based hiring, companies can help to level the playing field for all job seekers.
In response to the growing demand for skill-based hiring, LinkedIn introduced "Skills Path" in 2021, a new tool that helps recruiters evaluate candidates based on their proven skills. This innovative approach combines LinkedIn Learning courses with Skill Assessments to create a more equitable hiring process that focuses on candidates' abilities rather than their academic qualifications or work experience.
To begin the process, recruiters are asked to identify the skills required for a specific job profile. Then, using LinkedIn's Skill Assessments, candidates applying for that role are quickly evaluated for their skills, and any skill gaps are identified. LinkedIn then recommends the appropriate learning courses to fill those gaps.
Once a candidate completes the course and associated coursework, their profile is made available to recruiters for further evaluation. By taking this multi-step approach, LinkedIn is helping to create a more inclusive and equitable hiring process, where candidates from diverse backgrounds have a better chance to showcase their skills and succeed.
Overall, LinkedIn's Skills Path represents an important step forward in skill-based hiring, providing recruiters with a more reliable and efficient way to evaluate candidates based on their skills and abilities.
By leveraging LinkedIn's approach, any company can create or improve their own skill-based hiring process.
This process typically involves four steps:
First, companies should identify a pool of potential candidates who may be suitable for the upskilling or reskilling and promotion
Next, companies should establish a robust mechanism to assess the candidates' skills. This may involve using standardized tests like completing a project specific for the role, conducting interviews, or other methods like hackathons to evaluate the candidates' abilities.
To ensure that all candidates have the opportunity to succeed, companies should provide job applicants with access to learning opportunities, such as training courses or on-the-job training, to help them develop the skills they need for the role.
Finally, companies should select the best candidates based on a final skill-based evaluation. By following these steps, companies can build a talented workforce that can drive success and growth while minimizing turnover rates and recruitment costs.
P.S. We at Escalate help companies to streamline skill-based hiring, especially helping them to identify and train the right internal talent for their hard-to-fill entry-level tech jobs. For more information, please visit www.escalateusa.com
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