Benefits of Skills-based Hiring

John Akkara
Benefits of Skills-based Hiring

Find out why more companies are taking a skills-first look at tech talent

We’ve weathered epic quitting, layoffs, hiring freezes and inflation. Yet there’s still no dip in the demand for tech workers – and the digital skills gap just keeps gaping. Recruiters and employers have tried to speed up hiring processes and leverage AI to make screening smarter. Still the demand rages on.

Over the past couple decades, companies have tweaked this and that aspect of recruiting tech talent. But it wasn’t until recently that they adjusted one aspected they hadn’t tried. Their talent profile.

IT jobs have long required four-year college degrees and years of experience, which acted as proxies to “signal that a candidate was capable of performing a job.” Unconscious bias in job descriptions and hiring processes led, not only to a lack of diversity in the tech field, but made underrepresented job candidates feel unwelcomed to even apply.

A new trend in the way companies think about, recruit and consider tech talent works flips that approach on its head. And it’s catching steam.

What is skills-based hiring?

Skills-based hiring is an approach to recruiting and evaluating job candidates based on their skills, instead of their education or work experience. It asks candidates to show what they can do, not tell where they’ve been.

This recruitment strategy challenges HR professionals, hiring managers and recruiters to think differently about what makes the “perfect candidate” and if that’s even what they’re looking for.

It also helps candidates get unstuck from their past. Skills-based hiring opens opportunities for qualified people who might not have the right or any college degrees (those are getting really expensive), but have the aptitude and experience to excel in a job.

No surprise skills-based hiring is trending

Skilled trades have always relied on skills training and assessments to hire the right people to do important jobs. But it’s only (relatively) recently that tech has caught on.

LinkedIn launched Skills Path, a hiring program that promotes the use of a company’s learning courses and assessments to help recruiters find the perfect candidates for their available roles, in 2001. Tech companies, like Citrix, Gusto, and TaskRabbit, joined the program, and so the shift to a skills-first approach began. 

Nearly 60% of tech companies are now considering removing college degree requirements to fill critical tech roles. Specifically, organizations are taking a more holistic approach: they have stopped limiting the assessment of applicants to academic backgrounds and are considering candidates’ overall skills and achievements. 

More recently, tech giants have embraced a skills-based approach to hiring, too. Only 43% of Accenture’s IT job postings and 29% of IBM’s required a degree. Apple and Google followed suit, as over 20% of their combined job postings did not require a college degree. Microsoft and Facebook previously made similar pronouncements, though the actual implementation of such has yet to be seen. 

But the key reason more companies are adopting this approach is the results. Employers who prioritize demonstrated skill over the perfect resume see these types of outcomes:

  • 92% experienced fewer wrong-hires
  • 82% report a cut in cost-per-hire

  • 25% decrease in wrong-hires
  • 91% decrease in time-to-hire

Benefits of skills-based hiring for tech roles

More diverse tech talent pools

Skills-based hiring not only opens opportunities to more people (with or without a degree), but can also remove that unconscious that has historically made underrepresented candidates feel unwelcomed to apply.

Now, candidates have a chance to showcase their skills and capabilities, not simply some pedigree.

Nearly 30% of companies implementing skills-based hiring report access to more diverse talent pools. With this holistic, talent-first approach, more candidates gain access to opportunities because recruiters must more closely consider candidates’ skills, not just their degrees.

Improved screening of the right talent

On average, recruiters spend 6 seconds looking at a resume. A skills-based assessment allows tech recruiters to go beyond resumes.

Recruiters see applicants in action and discover if they have the skills required for the roles to which they’re applying. By testing candidates’ tech skills, recruitment teams effectively filter many unqualified applicants and bring only the most viable and qualified to the interview process.

Faster and more cost-effective hiring

Hiring tech employees based on their skills reduces time-to-hire by 50%.  Thorough evaluation of candidates’ tech competencies at the initial stages saves companies 87% of their recruitment costs.

Moreover, 70% of candidates who pass competency assessment tests get hired. This is because skill-based assessments ensure that new hires have the prerequisite skills for the job they applied for. They show whether candidates are fully acquainted with the necessary technology, tools, and framework.

As a result, these candidates require less time for onboarding and training. Faster time to deployment translates to improved business agility, which means faster time to value for the company.

The way forward for skills-based hiring in your organization

The modern workplace has evolved, especially in tech. We are now in a talent market where a candidate’s potential pulls more weight than their credentials.

Digital transformation, emerging technologies, and shifting workplace expectations have driven the demand for top-quality tech talent. Organizations need to innovate their hiring strategies to attract and onboard employees to fill crucial roles.

Companies that can quickly adapt to the talent market demands and utilize skill-based hiring will gain a competitive edge while diversifying their workforce. This method of recruiting has helped many businesses balance their workforce needs, expand their candidate pools, and make swift hiring decisions.

For employers that are struggling in this area, start by assessing job descriptions for skills necessary for the role and then work to build a system that focuses on these to bring in the most qualified candidates possible.

Skills-based hiring is a mindset that your organization can apply across your talent strategy and the methods you use to refine your job requirements, recruit talent, screen applications and hire the right people for your jobs.

Another prong of that strategy might be to develop those skills, specifically for the jobs you need to fill. Learn how a model called Hire-Train-Deploy can help.

Let’s Build Your Team

Connect with the Smoothstack team to learn how to close your digital skills gap with a custom-trained team.