Skill Based Hiring

Skill Based Hiring: The New Norm for the Future

The Right Degree or the Right Skills?

The traditional unwritten rule in the corporate world is that you wouldn’t get a job or have a promising career unless you went to a college and earned a degree. The majority of companies, colleges, students, and government officials agreed with this and rightfully so. The skills and knowledge gained from University programs equip students to solve real-world problems.

However, in recent times there has been a gradual shift in how the companies are hiring new professionals. While University Degrees and diplomas are still in demand, there is a new trend that companies are following. More than the degrees, the focus seems to shift towards the right skills; or in other words – right degree to right skills. Companies are looking to create a talent landscape that is a blend of degrees and skills. This has given rise to what is known as skill-based hiring. Let us explore the topic in the subsequent sections.

What is skill-based hiring?

According to the HR Certification Institute, “Skills-based hiring emphasizes practical, working knowledge for employees; it prioritizes what an applicant can do, rather than the education they already have. Instead of asking an applicant to list their years of experience and degree, you look for capabilities, such as reaching an expert level in Excel“.

Will companies prefer skill-based hiring?

Currently, the majority of companies are hiring based on relevant skills as well as required educational qualifications. However, some companies are bringing radical changes in their hiring process and prefer professionals who possess right skills through their certifications or experience. Apple is one such company that has drastically changed its recruitment process. In 2018, 50% of the people hired in the US did not possess any degree. Now, why are large corporates like Apple hiring people who haven’t been to college? According to CEO Tim Cook, there are certain in-demand skills like coding that students will not learn in college classrooms. Tim Cook also cited the example of Steve Jobs, who was a college dropout.

Hiring candidates without a formal degree is not just limited to Apple, but many other prominent firms such as Google, Netflix, IBM, and Hilton are hiring candidates without degrees or diplomas. Top companies are known to attract talent from top universities, but certain positions in these companies don’t require diplomas or degrees. According to LinkedIn, 17.3% of IT technicians working in leading companies are not graduates.

Does this improve the chances of finding the right candidates?

According to the TalentSpectra Research, there are several areas within IT where there is an acute shortage of skills – Cybersecurity, Data Science, Cloud. The demand for tech skills is growing and the supply is not able to keep pace with the growing demand. This demand-supply mismatch has become institutional and has become of one of the important pain points for HR practitioners and recruitment planners globally. The 2018 Harvey Nash-KPMG CIO Survey mentioned that 65% of companies reported that lack of talent is holding their organizations back. In another report by the Information Systems Audit and Control Association (ISACA), more than half of the hiring managers view that hands-on experience is most important for candidates than their educational background.

In 2016, the then IBM president Ginni Rometty wrote an article in USA today about the rise of “new collar” jobs that employers were struggling to fill, specifically in the technology sector. According to Rometty, traditional recruitment methods will no longer suffice in the new digital economy. In the future, candidates without a degree but with the required skillsets will be needed. Data Science and Cloud Computing are reshaping various industries, but filling positions with the right mix of skills and experience involves long-term assessment and proper manpower planning. She also added that “What matters most is that these employees … have relevant skills. Indeed, skills matter for all of these new positions, even if they are not always acquired in traditional ways.”

Benefits of skill-based hiring

1

Bigger Candidate Pool

2

Reduced time-to-hire

3

Reduced cost-per-hire

4

Greater diversity (different race, color, gender, people with disabilities)

What does the statistics tell us?

When we talk about statistics, hiring managers seem to stress upon the need for the right skills rather than a college degree.

Below are some of the interesting data pertaining to skill-based hiring: (Source: LinkedIn Jan 2019):

  • 69% of professionals think job skills are more important than a formal college education
  • 87% of hiring managers agree that the skills candidates list in their resumes and assessment forms are crucial in terms of hiring decision
  • 89% of the hiring managers feel that skill assessment is an essential part of candidate evaluation for a job that requires knowledge of hard skills
  • 83% of the hiring managers agree that skill assessment will have an impact on the future of hiring

The numbers tell a story – there is a growing trend among the majority of hiring managers and professionals who prefer skill-based hiring and job roles.

Shifting to a skills-based hiring framework

Skills-based hiring will help organizations to be more productive, efficient, and well-positioned to deal with the changing market scenarios, across industries. However, implementing a skill-based recruitment program is tedious and requires clear strategy and planning before the actual implementation starts. For organizations trying to implement skill-based hiring, we have listed some prerequisites.

  • Verification of skills

Any candidate can claim in their resume that they are proficient in one or the other skills areas – for e.g. Data Science or any other skills. To ensure the veracity of the claim it is essential to verify candidate credentials, work experience and/or certificates. One way is to ask for certifications in the areas, as claimed by the candidate. Another way is assessment or tests that are conducted by companies to test the aptitude of the candidates, and their skills including tech skills and hard skills. Many companies also have devised special assessments to identify and segregate top candidates with the required skills and those who are lacking in one area or the other. These timed tests can help recruiters evaluate candidate skills and ensure hiring efficiency.

  • Top team performers can assess candidates better

There is a traditional debate in terms of who are the right people to interview the candidates. True, from an HR/initial eligibility perspective recruiters have an important role to play. But it is equally important to note that the project teams, delivery staff also have their share of assessments. This is particularly true for technology skills or tech positions. Ideally, companies allow top team performers to conduct in-depth interviews, from a skills perspective. They are the people who know the kind of skills that are/would be needed within the project and how the job needs to be done. They join forces with the recruiting/HR teams to assess the skills a candidate has and how can those be useful for their team.

  • Start Small

Companies do not hire only on the basis of skills. HR teams can list down the roles present and potential that can be difficult to fill and including the roles that have the highest turnover. This can be leveraged to build candidate pools for roles that are difficult to fill – e.g. Data Science, AI, or Machine Learning. When the actual roles come the database can be of advantage to the recruiters in terms of their sourcing efforts and building a talent pipeline. This can gradually reduce the time and cost to fill such roles to a great extent.

  • Assessment Tests

Assessment of the skills possessed by the candidates should be an essential part in the recruitment process. HR teams can test the candidates through different methods such as writing a sample, presenting a problem, asking for a solution, giving a project, and assessing the outcome. There is no one-size-fits-all approach when it comes it skill assessment as it depends on the type of role and the industry. For instance, for a developer position, the hiring manager can ask the candidate to write a code. Similarly, they can ask the candidate to create a dummy website or a mobile application for a web developer role. The hiring of candidates based on skill assessment will curtail bias in hiring. Biased hiring might lead to flawed hiring decisions.

US Government support to encourage skill-based hiring

The US Government has decided to change the way it operates when it comes to hiring government employees. In the month of June 2020, President Trump had signed an executive order on skill-based hiring. In the future, the US Government will prefer skills over a college degree. According to the order, “The Federal Government will no longer be narrowly focused on where you went to school, but the skills and the talents that you bring to the job.”

The US Federal Government is the biggest employer in the United States, with more than 2.1mn people working across the country. The new executive order will support millions of Americans who were forced out of work due to the COVID-19 pandemic. While the Government does not eliminate degree requirements, but will favor those jobs where having a degree is less important, and skills are essential. Specific fields, such as Medical and Legal, require education and formal degrees and do not come under the purview of this order.

Final Thoughts

Skill-based hiring may be challenging to adapt to for HR teams and recruiters. But in the challenging times, it needs to become part of the culture. If the companies need access quality talent, skill-based hiring should not only be limited to the entry-level jobs but must also include hiring for senior and middle-level management. The HR teams must eliminate the old job descriptions and come up with the new ones after discussing HR managers and top performers. To ensure that companies are hiring the right candidate, they need to assess the candidates employing suitable assessment tests.

There are many benefits of a skill-based hiring program, including eliminating hiring bias, a reduction in cost and time-to-hire, higher employee retention, and a more diverse workforce. Many firms have already started skill-based hiring – this includes Apple, where more than half of the employees hired in 2018 were without a degree. Skills such as coding are in high demand in the job market and are not taught in universities. Apple is hiring coding specialists even without formal degrees, as there is an acute shortage of highly-skilled coding professionals. IBM, Google, and Netflix are following the same pattern. Moreover, the US Government has decided to move on from mandatory educational qualifications to skills when hiring for specific roles.

In the post-COVID-19 world, there will be millions of new jobs available. Companies will face difficulty filling the roles and need to pivot their hiring process and start looking for candidates who are proficient in the skills and not focus only on their formal education qualifications.

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