Skills-Based Hiring: Future-Proofing Your Talent Strategy

Many global executives understand how crucial it is to have a skills-based hiring strategy grounded in data to thrive in this digital world. However, most organizations don’t have the right data required to make well-informed skills-based talent decisions.

Continue reading to learn why skills-based hiring is so important and what steps organizations can take to implement a more robust talent strategy.

The Importance of Skills-Based Hiring

“Simply put, skills-based hiring is a selection process that matches an applicant’s skills to the skills required for the role,” Erin said.

Among the many effects that the COVID-19 pandemic has had on the workforce, a positive outcome is that applicant pools are looking different these days. Hiring managers are moving away from educational qualifications and prior employment experience to evaluate candidates during the talent acquisition process. They are more interested in being able to match a person’s potential to what a role requires.

The most effective and equitable way to address the highly varied backgrounds among candidates is to focus on skills. “In the world of talent, we had to start thinking more flexibly and more broadly about skills this person has displayed on the job previously, agnostic of the context in which they worked,” Erin explained.

Prioritizing Potential in Talent Acquisition

Many workers benefit from skills-based hiring. Early-career workers may not have work experience but do have transferable skills from education. Likewise, people changing industries, people with criminal convictions, and people who have employment history gaps all benefit from emphasizing their skills. (A full-time parent almost certainly has exceptional project management skills, for instance.) Workers with roles shifting because of AI technology are another group whose skills will likely need new application.

A hiring strategy focused on job-relevant skills is more equitable than one focused exclusively on education and experience. Thinking differently about a candidate’s talents and capabilities acknowledges that people have different ways to contribute to success. “There’s an equalizing component of skills that helps us get beyond this bias that has sat in selection for so long. There’s so much more potential to be had there,” Erin added.

How to Improve Your Skills-Based Hiring Strategy

Erin shared three things that organizations can do to improve their skills-based hiring strategy: (1) choose a comprehensive taxonomy, (2) select the right skills for the role, and (3) evaluate skills with good tools.

A Comprehensive Taxonomy

What kind of skills infrastructure will your organization leverage? “When we think about skills-based taxonomies, there are many out there in the talent space,” Erin observed. Some provide huge datasets of thousands of skills, which can be nuanced . . . yet unwieldy.

The best taxonomy is one that helps categorize talent cross-functionally and catalogs skills that underlie multiple jobs. It should also flex or adapt easily as skills needed for roles continue to evolve.

Select a taxonomy that has captured a comprehensive domain of all the skills that might be relevant for your organization’s needs. Ensure the taxonomy is backed with research and built using scientific processes such as factor analysis and criterion validation. The taxonomy should also match the intended purpose, whether that’s talent acquisition or talent development. Ask the right questions to verify that you have the right skills and the right reporting at individual and aggregate levels to help you achieve your goal.

Reliable Job Profiling

Using an effective job analysis or profiling method will help your organization select the right skills for the right role.

The level of rigor you use to create job profiles should match your selection goals. A high-stakes hiring decision will likely demand a different degree of job analysis than a high-volume role. “Maybe you’re working with a partner who has validation research for certain profiles already, and you can leverage those,” Erin pointed out.

Validated Measurement Tools

Aside from verifying that the skills in a profile are job relevant, it’s also important to ensure candidates can actually exercise those skills. Validated psychometric assessments allow your organization to evaluate people by their skills.

Degree of rigor comes into play here too. For a high-volume role, one psychometric measure is likely to provide sufficient detail, while hiring a CEO might call for multiple measures. “This is classic IO psychology best practice,” Erin said. “Strong basics are critical.”

Technology can enhance any skills-based hiring strategy. Tech assistance might be as simple as online assessment or as complex as AI modelling. “The most common ways we’re starting to see technology related to skills-based hiring is to help create a talent marketplace,” Erin said. People can assess or self-identify their skills, and organizations can share job opportunities with required skills. A platform like this enables people to search for opportunities as well as identify development goals.

Using Skills-Based Data for Talent Development

The link between skills and talent development is a big opportunity for technology—and for talent. Skills-based data can help current employees identify the critical skills for the next job they want to pursue. Erin identified these areas where skills data can shine internally:

• Awareness – understanding the alignment between your skills and the skills required for a particular job
• Differentiation – crafting a development plan based on your specific career or personal goals
• Growth – demonstrating measurable progress on actionable behaviors

Skills-based data can guide talent along different career paths internally. Two individual contributors in business development with different skill sets could have different long-term career objectives. One with strengths in data analytics and measurement could become a business analyst. One with strengths in building strategic relationships could become a senior consultant. “These skills frameworks help create more visibility into what those pathways might be,” Erin said. “It helps us get outside of this idea that the only place to go is up.”