How to Adopt Skills-based Hiring Practices

Introduction

​When it opened a new IT center in Providence, R.I., in 2017, GE Digital needed highly skilled workers—and fast. But candidates with the qualifications the company was seeking were hard to find. 

Fortunately, Rhode Island’s governor and state business leaders connected the company to TechHire Rhode Island, a program that promotes skills-based hiring through Opportunity@Work, a Washington, D.C.-based nonprofit seeking to create pathways to help individuals gain skills and access to technical jobs. Since 2015, TechHire has grown to include 237 training partners and 1,300 employers across 72 cities, states and rural areas. The network has helped place more than 4,000 people in jobs.                           

In Rhode Island, TechHire leaders linked GE Digital’s HR team with graduates of software coding boot camps put on by its training partners and shared hiring best practices that focus on candidates’ capabilities rather than their education, academic ranking or years of experience. 

With the program’s assistance, GE Digital was able to fill one-third of its open positions. “They helped us reach candidates that we had not found through traditional recruiting methods,” says Joseph Carey, the company’s former senior talent acquisition leader. 

Talent Gap

Despite the fact that nearly 8 million Americans are unemployed and looking for work, an estimated 6 million U.S. jobs remain unfilled. Labor analysts predict that the U.S. is on track to have 1 million technology positions available by the end of the decade. “Companies can’t fill those openings because the traditional way they’ve sourced candidates hasn’t gotten them there,” says Andrew Hanson, senior analyst at Georgetown University’s Center on Education and the Workforce in Washington, D.C.

That’s one reason competency-based hiring is most common in the tech sector, where finding candidates with the necessary skills can be difficult and competencies are more easily quantified. 

A 2017 study by consulting firm Accenture, Dismissed by Degrees, found that business leaders tend to view a college degree as a “proxy” for hard and soft skills, effectively shrinking the pool of viable candidates. Shifting from degree- and pedigree-based hiring to a competency-based approach can open up new pipelines for organizations struggling to find talent. Introducing objective means to gauge an applicant’s aptitude is intended to give employers a more robust profile of a job seeker’s qualifications. 

While technology fields have been the first to embrace a skills-based approach, the strategy could have far-reaching applications. ‘Skills-based hiring is relevant to any job.’

But hasn’t that always been the goal? Not necessarily, experts say. Often, a candidate’s proficiencies are not assessed until the final round of interviews—too late for nondegreed job seekers who decided not to apply based on a position’s educational requirements, or for candidates who are screened out by recruiters or applicant tracking system algorithms. 

“There’s been a proliferation in the ways people learn since the Internet, but hiring practices haven’t shifted,” says Joanna Daly, vice president of talent at IBM in the New York City area. “Skill cycles are faster now, and showing aptitude to acquire skills on your own is going to be important in the future. Businesses need workers who are adaptable.”

Nearly one-third of the new hires employed at IBM’s Rocket Center, W.Va., facility who work on cloud computing, cybersecurity, application development and help desk support do not have four-year degrees. “In the past, a manager might have said, ‘I need someone with a four-year degree and X years of experience,’ ” Daly says. “Now it’s ‘I need someone who knows how to code in Java.’ ”

To be sure, not all hiring managers have adopted this more progressive approach to identifying talent. “For the past several decades, the nation has operated under a simple principle—the surest path to labor-market success is through a bachelor’s degree at a four-year college or university,” says Mark Schneider, vice president at the American Institutes for Research and a visiting scholar in education policy studies at the American Enterprise Institute.

“If we move beyond our current fixation on the bachelor’s degree and … include all the postsecondary pathways at our disposal, far more options emerge,” Schneider says. The result will be greater opportunities for nondegreed job seekers and a far larger talent pool for employers.

The Right Stuff

While technology fields have been the first to embrace a skills-based approach, the strategy could have far-reaching applications. “Skills-based hiring is relevant to any job,” says Beth Cobert, CEO of Skillful, a workforce development initiative launched in 2016 by the Markle Foundation, a nonprofit organization based in New York City. The program, which began in Colorado, received more than $25 million from Microsoft in June 2017 to foster skills-based hiring, training and education. The grant will be used to expand the program into other states.

Paul Harter, CEO of Aqua-Hot Heating Systems headquartered in Frederick, Colo., says he learned a lot from partnering with Skillful. His 60-person company manufactures heating systems for recreational vehicles and trucks. 

“Talent acquisition has always been a huge issue for us,” Harter says. “In the past, when we had an opening, we would dust off an old job posting, put it up, require a B.S. in mechanical engineering and see what happened. Now we talk about what skills someone needs to be successful in the role.” 

In one case, that conversation led the hiring team to conclude that the list of competencies they had generated didn’t necessarily describe an engineer. After rewriting the job posting without the degree requirement, the company was flooded with high-quality candidates—and ended up hiring a diesel mechanic who possessed the abilities the business was looking for. “That tiny change made such a difference,” Harter says. 

“How many of us get degrees in a field we never work in?” he adds, noting that his own college degree is in commercial art. 

The benefits of the strategy reach far beyond time-to-hire, Harter says. “We now have single-digit turnover, and we don’t pay the highest salaries in our market,” he says. “[Our skills-based hires] are ‘stickier’—they hang around.” 

‘We’ve talked to some HR people who say, “Slow down. We’ve got a lot of time invested in the processes we have. I just need to fill the position!” ’ 

Research bears this out. In the 2015 publication Employer Playbook: Best Practices and Tools to Recruit Technology Talent from Nontraditional Sources, analysts from CEB Global (now Gartner) found improved retention as well as other benefits for employers, including reduced hiring costs and greater diversity. 

“If you’re limiting hiring to people with college degrees, we know minorities are underrepresented. In certain fields, we know women degree-holders are underrepresented,” Cobert says. 

At eMoney, a wealth management software provider based in Radnor, Pa., the HR team applied the approach to quickly hire 30 people to staff a new office. “The benefits included a broader and more diverse talent pool that brought different life experiences and ways of thinking to the table,” says Tessa Raum, SHRM-CP, the company’s director of human resources.

The U.K. office of accounting firm EY stopped requiring new hires to have a college degree in 2016 after an internal study found little correlation between academic success and job performance. Now the company evaluates applicants based on the results of a series of pre-employment tests. 

Overcoming Obstacles

Proponents of skills-based hiring acknowledge that it’s not always an easy sell. When Harter has spoken on the topic at business gatherings, he has met some resistance. “We’ve talked to some HR people who say, ‘Slow down. We’ve got a lot of time invested in the processes we have. I just need to fill the position!’ ” And hiring managers acknowledge that a strategy shift requires a substantial time investment, especially in the beginning. 

But HR professionals new to using the strategy don’t have to start from scratch. Several advocacy groups provide free online tools to help with manager training, evaluating competencies and skills, writing job descriptions, and using inclusive interviewing techniques. 

Once you’re armed with tools, have a conversation with line managers about the specific competencies they are seeking for each open position. “Get really good at asking questions that peel back the onion,” says Jen Silbert, senior project manager for TechHire Rhode Island. 

Cobert agrees: “Hiring managers know what skills they need, but HR pros can help articulate them.”

Next, you’ll need to validate proficiencies. For many employers, this may require reversing the usual order of the recruitment process. “Tech assessments should be a preliminary, rather than a concluding, step,” Silbert says. Only candidates who meet or exceed your assessment bar move on to the next step. 

There are a range of solutions available to help employers rate candidates, particularly in the technology field. HackerRank, a recruiting platform that assesses software developers on their coding skills, offers online scenarios that employers can send to candidates via e-mail. Employers can choose challenges from the platform’s library or build their own based on their business needs. Content covers 35 programming languages and six different computer science domains such as algorithms, artificial intelligence, databases and cryptography. 

“It’s hard to figure out how good someone is from a resume,” says Vivek Ravisankar, CEO and co-founder of HackerRank, based in Palo Alto, Calif. “Everyone says they’re an expert, but our challenges allow companies to find out who can actually do the job.” 

IBM uses its own internal pre-hire tools for tech candidates. “We give candidates a live test to work on, instead of just asking questions about hypothetical situations,” Daly says. “We ask applicants to write code, or [for sales positions] we give them a sales scenario and videotape how they handle it.” 

The process doesn’t eliminate such traditional steps as interviews and reference checks. It just reverses the order so that once the relevant competencies are quantified, hiring managers and recruiters can screen for the best fit for the team. 

The Future of Hiring

As with any new initiative, a switch to skills-based hiring requires buy-in from management. “It can only succeed when HR leadership and line leadership come together,” Cobert says. Many businesses have reached the pain point in talent acquisition where they’re ready to try a different tactic, experts say. 

For employers new to adopting the practice, HR professionals recommend implementing it on a trial basis with one hard-to-fill tech position, rather than attempting to overhaul all of the organization’s processes at once. 

If projections hold true, the need for applicants to possess clearly defined competencies will only increase. “Regardless of industry,” Daly says, “this is the way of the future.” In our digital age, it may be time to do away with analog methods of finding the best talent. 

Jennifer Arnold is a freelance writer in Jacksonville Beach, Fla.

Illustration by Peter Horjus for HR Magazine.