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What Is Skills-Based Hiring and Why Does It Matter?

It’s time to look at hiring through a slightly different lens. When many companies post an open role, they fill the job description with qualifications such as years of experience and education requirements. 

But are those actually needed to find the right candidates? You might be surprised—the research shows that skills-based hiring, where you consider the skills needed for a job instead of experience or education, leads to better hiring outcomes. And frankly, at Cangrade, it’s the way we’ve always thought hiring should be conducted anyways. 

So let’s dive into everything you need to know about this increasingly popular form of hiring. 

What is Skills-Based Hiring?

Skills-based hiring is about conducting your recruitment process based on the skills and competencies a candidate has, instead of relying on years of experience and education credentials to assess their qualifications. 

After all, those experience and education credentials are really just a way of attempting to estimate whether a particular candidate can do the job. And of course, their years of experience in a role or degree might give them the skills required—but it’s no guarantee. 

Using skills-based hiring to fill open roles means you can sort out who can truly do the job, instead of who fits a certain profile. This kind of hiring has many benefits to both employees and candidates. 

The Benefits of Skills-Based Hiring 

It’s no secret that the talent environment right now is highly competitive. Top candidates are scarce and extremely sought after, making filling those open roles harder. But by evaluating candidates based on their skills and competencies instead of just the line items on their resumes, you can open up a wider talent pool of potential employees who are also truly qualified to do the job. 

And the research bears this out. McKinsey research shows that hiring for skills is five times better at predicting job performance than hiring for education, and it’s more than twice as predictive than hiring for work experience. 

No wonder employers are increasingly moving away from requiring four-year college degrees in positions that don’t actually need that level of education to get the job done (also known as degree inflation). Harvard Business Review found that this shift away from inflated educational requirements was especially pronounced for middle-skill positions, where some education is needed but not typically a four-year degree. 

This focus on skills and competencies instead of experience and education is great for hiring equity as well. Requiring a bachelor’s degree or years of experience in similar roles shuts out many qualified applicants, particularly people who have less access to higher education or male-dominated industries. 

The Downsides of Skills-Based Hiring 

Of course, not every role is right for skills-based hiring. For senior management roles and higher, those years of experience and, often, educational credentials are critical to measuring if candidates are up to the task. Skills-based hiring is better suited for more junior roles where education and experience aren’t as critical. 

Skills-based hiring can also be conducted ineffectively if you only focus on the hard skills needed for a role. Soft skills like critical thinking and communication are just as, if not more, important to consider when making a hiring decision. Testing for both types of skills needed for the role will ensure you’re getting the right candidates all around. 

How to Start Using Skills-Based Hiring 

Interested in moving towards a skills-based hiring model? You don’t have to get as drastic as tossing out the requirement to submit resumes altogether (although you might want to consider it!), but you will have to make a few shifts to your current recruitment process. 

First, you need to determine how you’ll test applicants for the required hard and soft skills for the role. Cangrade’s Pre-Hire Assessments are a great place to start as they’re comprehensive and guaranteed bias-free. 

But the process doesn’t stop with skills tests. You should also conduct structured interviews as a complement to the testing because you can evaluate candidates based on the strength of their answers to a predetermined set of questions, instead of their connection with their interviewer. 

Cangrade’s talent solutions can widen your talent pool by using data and help increase your hiring equity. See how we can help you create a skills-based bias-free recruitment process today.