Transforming HR: The Rise of Skills-Based Hiring and Retention Strategies

The future of work is changing rapidly, bringing new challenges and opportunities for HR professionals to rethink traditional practices. In the WorkplaceTech Spotlight series hosted by Guillermo Corea, we gain valuable insights from innovators driving solutions tailored to the evolving business landscape. In a recent conversation with Stephen Johnston, CEO of talent assessment platform GoodJob, Corea explored one such transformation underway in recruitment and retention—the increasing prioritization of skills over qualifications.

Johnston shed light on the limitations of conventional hiring that is focused solely on degrees and work histories, arguing for skills-based screening that aims to understand candidates more holistically. His perspectives highlight the pressing need to modernize existing HR infrastructures and mindsets to welcome broader, more qualified talent pools into organizations. About three-fourths of companies (73%) used skills-based hiring in 2023, and 27% adopted it in just the last 12 months. Despite this shift, over 60% of employers still rejected otherwise qualified candidates simply because they lacked a college degree, revealing a significant barrier that needs to be overcome. With adjustments to current protocols that often inadvertently “screen out” capable candidates, HR professionals can seize the chance to strengthen their workforces for the better.

The Evolving Landscape of Recruitment

Since the 1980s, a college degree has traditionally been the default prerequisite for professional opportunities. Job descriptions overwhelmingly list bachelor’s degrees or more-advanced degrees as hard requirements, filtering out applicants without higher education. However, as Corea pointed out, current data reveals a promising shift—employers have steadily reduced degree requirements over the past five years. Instead, job postings now emphasize technical qualifications and soft skills aligned with corporate cultures.

In other words, the recruitment landscape is evolving to widen the talent pool beyond candidates emerging from structured academic paths. Degrees remain relevant, but organizations have realized that academic qualifications alone cannot predict performance or retention. Recruiters are now 50% more likely to search for candidates by skills rather than years of experience. This paradigm shift lays the foundation for skills-based hiring to take center stage.

The Case for Skills-Based Hiring

Skills-based hiring flips existing recruitment models upside down via a simple yet radical mindset shift. Instead of screening out candidates without certain degrees, HR professionals should focus on screening them in based on the competencies needed for success in roles. This allows for the discovery of high-potential employees from unconventional backgrounds who demonstrate the technical, behavioral, and cognitive abilities to exceed expectations once trained.

As Johnston suggested, skills-based hiring compels HR teams to reimagine how roles are defined, evaluations are conducted, and job specifications are written. Rather than relying solely on resumes, structured interviews, and other traditional HR protocols, a skills-focused process demands a clear understanding of make-or-break attributes that lead to top performance. Once armed with that insight, HR professionals gain the flexibility to qualify applicants according to likely job fit beyond just qualifications on paper. The benefits of this approach are clear—employees hired based on skills have been shown to stay with their companies 9% longer compared to those hired through traditional methods.

Challenges and Solutions in Implementing Skills-Based Hiring

Transitioning to skills-based screening brings sizeable infrastructure and process challenges. It requires analysis of predictive behaviors and personality traits for various jobs. Companies must integrate customized behavioral or cognitive assessments earlier when sourcing candidates. However, the undertaking promises immense upside.

As Johnston explained, the reason for termination generally ties back to poor culture fit despite applicants initially meeting qualifications. However, optimizing for behaviors indicative of success in target positions increases retention. When supported with training to develop the required technical abilities, motivated candidates who are aligned with corporate values progress smoothly through onboarding.

HR teams looking to prevent attrition tied to deficient soft skills can gain buy-in for skills-based transformation by spotlighting associated costs. Demonstrating how maximizing job fit protects payroll, recruitment, and onboarding investments in the long term compels leadership to implement needed mechanisms. Combined with examples of leading organizations that have incorporated soft skills testing or adjusted key performance indicators (KPIs) to better capture candidates’ potential, building consensus for change can accelerate the process.

Real-World Impacts and Success Stories

Significant financial and retention results emerge when skills alignment is prioritized in staffing specialized roles such as nurses. Considering the high expenses that myopic hiring bears, skills-based recruitment provides a stronger assurance of candidates onboarding, adapting, and thriving. In nursing, replacing burned out or ill-fitting staff requires repeating costly license and training burdens. Mitigating such scenarios thus has considerable upside.

Johnston noted sobering industry data indicating that nearly 50% of new hires are terminated or quit within their first 18 months on the job. Clearly, qualification-centric recruitment has failed to deliver reliably engaged, high-quality teams. However, businesses adopting skills-based models that accurately predict work style compatibility report improved employee performance, tenure, and job satisfaction over time.

Weary of inadequate hires, struggling with rising turnover in competitive fields, and facing ever more pronounced skills mismatches in transforming job markets, HR professionals have expressed growing enthusiasm for behavioral-focused recruitment. As Johnston remarked, consciousness seems to be reaching critical mass. With the pressing need to sustain reliable workforces, leaders realize answering the demand for skills-based solutions remains vital to strengthening economic stability.

Future Outlook and Recommendations for HR Professionals

Integrating skills assessments deeper into corporate HR functions presents challenges for global enterprises, but technology promises to expedite transformation. Johnston forecasted that streamlined recruitment ecosystems will emerge that unify individual skills profiles, personalized career development, and accurate job matching. He argued that resumes will phase into secondary status behind skills-first evaluations amplified by AI.

For HR professionals equally convinced of skills-centric hiring’s advantages, a few recommendations may help smooth the initial steps of changing your organizations’ processes:

• First, align with departmental stakeholders and talent teams on the types of hard and soft skills that most affect performance across business units. Determine core behaviors that allow employees to assimilate into cultures, demonstrating what success looks like beyond credentials. Then, collaborate to replace aspects of job descriptions or requirements that do not predict candidate results with relevant behavior-based criteria.

• Next, secure executive support for any process or technology investments needed to integrate valid skills assessments upstream alongside existing qualification checks. Whether via system enhancements or behavioral interviewing training, secure the essential budget.

• Finally, the existing HR member KPIs should be updated to capture broader metrics beyond short-term cost-per-hire. Incorporate longitudinal indicators such as employee net promoter scores, turnover/attrition rates after 18 months, and internal mobility numbers to spotlight the effectiveness of skills testing.

Concluding Thoughts

Recruiting and retention challenges demand fresh solutions suited to modern workplace dynamics and geared to maximize human potential. Skills-based hiring provides a compelling path forward. With adjustments to industrial-era hiring protocols and mindsets still prevalent in HR flows, organizations can gain more innovative workforces, improved mobility, and talent strength resilient to disruption.

FAQs

What is skills-based hiring?

Skills-based hiring is a recruitment strategy that focuses on assessing candidates for the specific technical and soft skills needed to succeed in open positions rather than relying predominantly on college degrees or previous job titles. Skills-based hiring aims to match candidates to roles based on proven competencies.

How does skills-based hiring benefit companies and employees?

For companies, skills-based hiring widens the talent pool and provides stronger predictors of job success when it is used alongside existing qualification checks. It’s proven to reduce turnover stemming from poor culture fits. For employees, it levels the playing field and provides opportunities based on capabilities rather than credentials alone.

What challenges might companies face in transitioning to skills-based hiring?

Shifting to skills-based screening can create infrastructure and process challenges surrounding updating job descriptions, changing key performance indicators, integrating skills assessments earlier in hiring, and gaining buy-in across the business to make adjustments. It requires proper analysis to determine which skills correlate directly to performance.

How can companies identify the right behaviors and traits for success in their roles? 

Companies can analyze existing top talent to determine what soft skills, cognitive abilities, and motivational behaviors set them apart. Sophisticated talent assessment tools based on behavioral science, predictive algorithms, and machine learning can also help determine traits for success in given roles.

What role does technology play in facilitating skills-based hiring?

Emerging recruitment tech and artificial-intelligence-based platforms promise to streamline skills-based hiring by unifying candidate skills profiles with predictive matching algorithms. This allows for the precise assessment of abilities to identify best-fit roles quickly. As these tools improve, skills-based hiring can scale across enterprises.

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This article was written based on Episode 19 of the WorkplaceTech Spotlight. 

Thank you to Stephen Johnston, CEO of GoodJob, for contributing to the conversation. 

Sources: 

• [Source: SHRM - WorkplaceTech Spotlight - Ep. 19]
  [ https://www.youtube.com/live/l_7A10CwgvU?feature=shared]
• [Source: Monster - 2021 Future of Work Survey][https://www.prnewswire.com/news-releases/monster-announces-the-results-of-2021-future-of-work-survey-301215440.html]
• [Source: BCG - Competence over Credentials: The Rise of Skills-Based Hiring]
  [https://www.bcg.com/publications/2023/rise-of-skills-based-hiring]
• [Source: SHRM - Skills-Based Hiring Requires Commitment to Change][https://www.shrm.org/topics-tools/news/talent-acquisition/skills-based-hiring-requires-commitment-to-change]
• [Source: TestGorilla - State of Skills-Based Hiring 2023][https://www.testgorilla.com/skills-based-hiring/state-of-skills-based-hiring-2023/]