Now more than ever, skills-based hiring is at the forefront of business conversations.
While skills-based hiring isn’t new, organizations willing to undergo a company-wide transformation and take a skills-first approach are seeing success with building relevant taxonomies and developing employees’ careers faster than those operating in more traditional models. With a focus on finding the right person for the job by concentrating on their abilities rather than qualifications, skills-based hiring is about who can do the work well—and who has the potential with the right learning and development program—), not who looks good on paper. Yet, research from American Student Assistance shows that despite a strong majority (81%) of employers saying they should prioritize skills and not degrees, many organizations struggle to translate this intent into action.
Overcoming Obstacles to Make the Shift to a Skills-Based Model
Traditional hiring restricts a company’s talent pool by limiting the overall strength and resilience of a company’s workforce, narrowly focusing on education and previous employment experience. In contrast, skills-based hiring breaks down these barriers by prioritizing core competencies, empowering businesses to tap into a wider range of talent, fostering diversity in both thought and approach.
Making the switch to a skills-first strategy can be especially challenging for established companies with entrenched hiring practices because it necessitates a complete shift in perspective. With this change comes a challenge to existing structures, including the intertwining of the talent acquisition and talent management pieces into a cohesive system around the skills engine itself so it doesn’t become an afterthought.
Is It Worth the Effort?
The answer to this question is a resounding yes. Skills-first principles, when embedded properly into the hiring process and wider organization, improve work models that encourage both employee retention and career development. The key is mapping out a total talent model—a long-term strategy for both the internal and external workforce—that drives decision making across all areas of the business. As an added bonus, accoridng to Josh Bersin, companies that have adopted skills-based hiring practices already also boast 31 times higher employee engagement and retention—a key factor of success in today’s competitive landscape.
Skills-based hiring also furthers diversity, equity, inclusion and belonging (DEIB). Evaluating people based on skills and skills potential rather than education furthers equity in an organization by widening talent pools to those who may have been disqualified in the past due to social disadvantages and unconscious bias in the hiring process. Plus, it’s been proven time and time again that diverse teams perform better, achieve financial goals more consistently, and bring more innovative solutions. In fact, companies with above-average diversity in their management report innovation revenue 19% above those with more homogenous leadership, according to BCG.
Ultimately, skills-based hiring isn’t just about finding the right people—it’s about fostering a culture of continuous learning and development, unlocking the full potential of a diverse and adaptable workforce. For example, instead of focusing on whether someone applying for an IT support role needs to be familiar with a specific hardware brand, instead ask if they have the foundational knowledge of troubleshooting techniques and networking principles. This is part of the mindset shift required to successfully implement a skills-based model as people continue moving across industries and careers. And if they don’t know, can they be taught?
Future-Proofing the Workforce in a Skills-Based World
Building a future-proof workforce hinges on developing internal talent. Continuous learning is the cornerstone of this approach. In fact, the average person holds a dozen jobs throughout their career, according to the US Bureau of Labor Statistics, underscoring the necessity for adaptability. And as technology evolves and skills requirements shift, the workforce is better equipped to adapt. Whether it’s upskilling (adding new skills to an existing repertoire) or reskilling (acquiring entirely new skills for a different role), a culture of continuous learning ensures the workforce stays relevant and prepared for future challenges. This agility allows for seamless integration of new skills and navigation of the ever-evolving industry demands.
Continuous learning also unlocks hidden potential within an organization. For example, mobility programs can identify underutilized talent and those nearing project milestones. By offering ongoing learning opportunities, employees are empowered to explore new roles and expand their skillsets.
In essence, continuous learning is the fuel that propels a skills-based workforce forward. It fosters adaptability, unlocks potential, and helps organizations embrace change and thrive in a dynamic future.
How to Begin the Shift to Skills-Based Hiring
Building a strong foundation for skills-based hiring starts with fully understanding business objectives and knowing both the organization’s current and potential skills gaps. Addressing existing gaps paves the way for employees to upskill and develop their careers—which helps employers with extra engagement and retention in the long run. It’s a win-win situation for both the business and employees.
This step alone is a major overhaul, as creating a database of current employee skills, including existing workforce and job titles, is no easy feat. It requires continuous effort combined with strategic technology. Many organizations have yet to integrate a skills map into everyday processes, which is why many of these skills projects start and then stagnate. Buy-in from both employees and managers on assessing skills is needed to move the needle and set a strong foundation for their skills analysis.
The next step is to build the skills map into a skills taxonomy (a framework that categorizes the skills within an organization) and a skills ontology (a framework that also defines the relationships and properties between roles). Both need to be constantly updated so they can properly function as an ecosystem on how skills interconnect and can evolve over time. It’s essential to remain dynamic when it comes to cataloguing skills, as workforce and industry demands are expected to continuously change. Ontologies show an interconnected, nuanced view of skills, while the taxonomy identifies and defines them.
Key Benefits of Implementing a Skills Taxonomy
Framework for skills gap analysis:
- It provides a clear structure to identify and analyze skills gaps within the organization, allowing for targeted development initiatives.
Effective employee deployment:
- By understanding the skills available, organizations can allocate resources more efficiently and deploy employees where they can have the most impact.
Nurturing talent:
- A skills taxonomy helps in recognizing and developing the talent within the organization, ensuring that employees’ skills are aligned with business needs.
Supporting talent mobility:
- It facilitates internal mobility by providing a clear pathway for employees to transition between roles or projects based on their skills.
Enhanced employee experience:
- Employees benefit from a more personalized career development approach, leading to higher job satisfaction and retention.
Optimized recruitment process:
- With a skills taxonomy, recruitment can be more precise, matching candidates to roles based on required competencies and skills.
Competitive advantage:
- Organizations that effectively manage and develop their talent can gain a competitive edge in the market.
Futureproofing:
- A well-maintained skills taxonomy ensures that the organization can adapt to future changes in the job market and technology.
The Bottom Line
A skills-first approach is the future of talent acquisition. In addition to fostering a more engaged workforce, a skills-based focus also builds resilience through continuous learning and upskilling. However, successful implementation requires a complete overhaul, with aligned leadership and a focus on building a “skills engine” that integrates talent acquisition and management. Ultimately, skills-based hiring with continuous learning empowers businesses to build a future-proof workforce that can thrive in a dynamic job market.
Alicia O’Brien is the Senior Vice President of Innovation, Consulting, & Customer Success at WilsonHCG.
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