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“the two most important things in any company do not appear in its balance sheet: its reputation and its people” – Henry Ford.

The trend toward skills-based hiring will accelerate in 2023 as the labor market adapts to new technologies and ways of completing work. Now more than ever, employers are moving away from the traditional hiring processes and embracing skill-based recruitment to assess potential candidates. But why? By understanding the advantages of this hiring technique, you can make an informed decision about if it is right for your business. This blog discusses three reasons why companies are rapidly adopting skill-based hiring, and how it improves hiring outcomes.

What is skill-based recruitment?

In contrast to a traditional recruitment approach, skills-based hiring is not based on degrees or fancy job title. Instead, it focuses on individual skills and abilities and how they can benefit their employer. This recruitment method enables companies to assess applicants based on prior work experience and skills when determining candidate suitability for job openings. In addition, the skill-based approach provides recruiters with clarity when making staffing decisions because skills, especially hard skills provide an objective quantifiable criteria.

Skills-based Candidate Screening

Skill-based screening measures the knowledge, skills, and competencies to gauge whether a job applicant meets the minimum standard or higher necessary to do a given job.

  • 40% of companies have invested in screening tools to manage high numbers of applicants. (Toggl)

Skill-based assessments

Skills-based employment assessments objectively evaluate a candidate’s ability to perform the duties listed in the job description. Most skills assessments can take the form of written tests, practical tests, or simulations.

  • 64% of companies agree that skills testing initiates faster candidate screening (Toggl)
  • 36% of recruiting managers experience higher satisfaction with their final decision in cases where candidates were assessed based on skill (Aberdeen)
  • Companies using pre-employment skills assessments report a 39% lower turnover. (Aberdeen Strategy and Research) 

Skills based interviews

Skills-based job interviews are candidate answers questions designed to assess if their skill set matches the organizational requirements for the position.

Examples of proven skills-based interview questions (Indeed):

  • Describe a situation when you were responsible for leading a team.
  • Describe a time when you demonstrated leadership abilities.
  • Give an example of a time when you used communication skills at work.
  • Has there ever been a time when you had to handle a conflict at work?
  • Describe a time when you had to adapt to a new situation.
  • Has there ever been a time when you had to handle conflicting deadlines at work?
  • Describe a time when your supervisor gave you a new responsibility and how you handled it.
  • Give an example of a time when you demonstrated organizational skills.
  • Give an example of a time when you solved a problem using critical thinking.
  • Describe a time when you had to make a quick decision in a short period of time.

Three Reasons Businesses Use Skill-Based Recruitment

l) Skills-Based Recruitment Strengthens Talent Management Strategies 

“I’m convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies.” – Lawrence Bossidy.

Studies show that selecting candidates based on skills can lead to better job outcomes than relying on traditional approaches, which prioritize job titles and university degrees. For instance, skill-based recruitment strategies encourage HR managers to collect, organize and manage employee skills, knowledge, and competencies. Managing skill information facilitates recruitment strategies in the following ways:

  • Allows companies to identify skill gaps
  • Supports the development of employee career paths
  • Encourages diverse talent pools
  • Enables equitable hiring practices
  • Improves employee retention rates

In sum, recruitment based on skill requirements increases employee confidence and enhances organizational morale. These employees will experience higher levels of job satisfaction, knowing their contribution is valued.

Recruitment Strengthens Talent Management Strategies

ll) Skills-Based Hiring Increases Organizational Talent Pools

Skill-based hiring, when done well, can result in a solid foundation of employee talent, providing advantages over its competition. A talent pool is a database of potential job candidates that have the potential to meet an organization’s present and future needs. Furthermore, a solid talent pool allows companies to develop employees further to specialize in specific business domains that align with organizational objectives, competencies, and value propositions.

“Our data shows that the happiest employees are often those who feel valued by their employers through a variety of factors like competitive compensation, clear goals, work-life balance, and a general excitement working for their organizations,Jason Nazar, co-founder, and CEO of Comparably.”

In addition, talent pools assist HR professionals in developing career pathways and succession planning, ensuring that top talent remains with the company for the duration of their careers. Lastly, building and developing talent pools allows businesses to manage change in ways that enhance organizational agility, adaptability, and flexibility.

lll) Skills-Based Hiring Leads to Better Person-Job Fit

Fitting into a position is vital because it is directly related to an employee’s well-being, performance, and satisfaction. Also, performance impacts workplace relationships. For instance, nobody will wants to work with someone who consistently struggles to do the job and increases the workload for everyone else.

Person-job fit is the degree to which an individual’s knowledge, skills, abilities, and other characteristics match specific job requirements. In this regard, skills-based recruitment is the right approach because it ensures that individual candidates are qualified and can do their job well.

“When I find an employee who turns out to be wrong for the job, I feel it’s my fault because I made the decision to hire him.” ­­– Akio Morita

An employee who is not confident in their role or struggles to complete duties is more likely to leave versus someone fully qualified and able to execute. Therefore, hiring employees for the best fit is an effective way for organizations to improve employee retention rates.

“If you think it’s expensive to hire a professional, wait until you hire an amateur.” – Red Adair.

The trend away from traditional recruitment and toward skills-based recruitment will only accelerate in the coming years. By understanding the advantages of this hiring style, you can make an informed decision about if it is right for your business. Skills-based hiring allows recruiters to assess a candidate’s ability to perform the tasks required by the job rather than relying on factors such as past job titles or university degrees. This approach can help you identify hidden talent and assemble a team fit for your company’s needs. Are you ready to make the shift to skill-based hiring?

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