How to Implement Skills-First Hiring in Your Workplace

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Skills could be a more effective indicator of job performance than education or job titles. Here’s how to start changing your company’s approach to talent.

Hiring woes have plagued small businesses in recent months, but “skills-first” hiring may help ease labor shortages.

Skills-first hiring is an approach to talent management that focuses “directly on skills, rather than on how they have been acquired,” according to the World Economic Forum. Research shows that it can be five times more predictive of job performance than hiring based on education.

It’s also catching on: Seventy-five percent of recruiting professionals expect that skills-first hiring will be prioritized at their company in the next 18 months, according to a recent LinkedIn report. But many opportunities remain untapped, as another recent LinkedIn analysis shows that the U.S. candidate pool could increase 19 times with a skills-first hiring approach. This opportunity for growth spans industries from real estate to financial services to even more specialized sectors like oil, gas, and mining.

Smaller companies are particularly suited to implement skills-first hiring, says Michelle Sims, CEO of the skills-first placement firm Yupro Placement: “They are nimble, they can change policy quicker, and they have less red tape.”

Here’s how to take a skills-first hiring approach in your own organization, according to Sims and other leaders who have successfully employed the tactic.

Adjust key language in job postings

Skills-based hiring starts with using inclusive language in job descriptions, emphasizing transferable skills over unnecessarily restrictive requirements to draw in more diverse, capable candidates.

One such restrictive requirement could be a college degree–especially as approximately 50 percent of the U.S. workforce have acquired skills through alternative routes, according to the nonprofit organization Opportunity@Work. Climb Credit, a Las Vegas-based student lending platform that helps finance skills-training programs, eliminated a bachelor’s degree requirement on many of its job postings in 2019. CEO Casey Powers says a skills-first approach to hiring has resulted in strong retention and diversity at the company since then.

Instead of relying on blanket requirements, like bachelor’s degrees, companies should break down requirements into explicit hard and soft skills, Powers says: “You have to use language that’s more precise and more thoughtful.” For instance, on a job advertisement for a FinOps data analyst role, Climb outlined the need for a candidate “inclined toward taking action and initiative” who can also “automate and improve current financial operations through SQL and Microsoft Power BI.”

Test abilities through targeted exercises

To ensure potential job candidates have the skills necessary for the role, employ skills tests or case studies. Climb presents prospective employees with case studies that detail real situations they may face on the job. The way candidates describe how they would react to those situations can be revealing, Powers says, and help identify a skill fit.

Think critically about the skills you test for, says Kyle Pinches, director of talent acquisition and onboarding at SEP, a software development firm based in Carmel, Indiana. Though many software jobs require coding, specific coding languages can be taught, he says: “More important to us is probably aspects of: Can they actually debug problems? Can they communicate? Can they take a requirement and turn that into working code?”

SEP partners with Woven, a technical assessment platform, to develop these scenarios and determine how candidates should be evaluated, which helps to better inform the rest of the hiring process, Pinches says.

Train your team (and not just HR)

Every person who plays a role in the hiring process should have a well-rounded understanding of what skills-first hiring is and what skills should be prioritized in the candidate’s consideration, Powers says. This means that the candidate’s future manager and colleagues should align on what to include in the test scenarios and interview questions.

It’s a good idea to first use skills-based hiring to fill entry-level jobs, Sims says, and ensure that you have champions within those departments to institute a skills-first hiring approach. The upshot: You’ll actually be able to identify key skills in candidates from the get-go, simplifying future on-the-job training.

“That’s probably the key–knowing how to get the person from coming in with a certain set of skills and, over time, [figuring out] what does their career path look like?” Pinches says. “What mentoring, what other types of learning make sense?”