Skills-first versus traditional: which hiring strategy wins?

Why it may be time to rethink tried-and-true talent acquisition methods

Now that 90% of businesses are eager to embrace skills-based strategies, it’s time for hiring practices to adapt accordingly. While traditional talent acquisition methods often favored candidates with advanced degrees, or similar job titles, there’s a new approach to sourcing that’s rooted in employees’ competencies: skills-first hiring.

Although many companies are just beginning to experiment with this strategy, it’s already showing some significant advantages over traditional hiring practices. Most notably, employers who find talent using skills are 60% more likely to make a successful hire than those who do not rely on skills.

Faced with ongoing economic uncertainty and ever-widening skill gaps, no organization can afford to hire employees who lack the competencies needed to accomplish business-critical priorities or overspend to compete to hire expensive candidates with high-priority skills. Rather than sticking to traditional hiring strategies that fail to spotlight candidates’ capabilities and potential knowledge gaps, a skills-first approach paves the way for smarter talent management decisions.

What is skills-first hiring?

Skills-first hiring is an alternative to traditional talent sourcing models that focuses on the capabilities that a candidate brings to the table, rather than their backgrounds and past experiences. It allows companies to grow by bringing in new skill sets and perspectives.

Many leaders who embrace skills-first hiring find that it diversifies talent pools by de-emphasizing educational requirements in favor of requisite skills. Some skills-first hiring practices include testing for certain skills throughout the interview process rather than focusing primarily on references and past achievements.

Skills-first versus traditional hiring: the key differences

While the ultimate goal of any hiring strategy is to acquire qualified talent, the path to achieving this objective varies greatly depending on the sourcing approach you choose. Some of the most important differences between skills-first and traditional hiring include:

• Decision factors
  In skills-first hiring practices, skills are the deciding factor that determines which candidate will be selected for an open job or opportunity. In contrast, traditional hiring favors past experiences, with educational background and prior jobs typically carrying the most weight during the decision process.
• Processes
  During a skills-first hiring process, candidates are often evaluated on the skills that will be most relevant to the job they are pursuing. While a skills assessment may be one component of a traditional hiring process, it isn’t always and it typically carries less weight.
• Internal and external candidates
  Skills-first hiring often prioritizes internal talent because existing employees have transferable skills that can make them strong candidates for open opportunities. An internal-first mindset is uncommon during traditional hiring; instead, companies primarily focus on acquiring talent from outside of their organization.

Why is skills-first hiring becoming the dominant strategy?

Although it may be a new concept, skills-first hiring is gaining momentum thanks to the following advantages associated with it:

• Enhanced performance and productivity
  When hiring managers select candidates based on their skills, they can feel confident that these employees will have the knowledge needed to complete high-priority projects efficiently. Skill shortages will be less of a risk because the talent acquisition process is built around ensuring candidates are capable of performing the responsibilities of their roles effectively.
• Greater agility
  In order to practice skills-first hiring successfully, organizations need a complete understanding of where capabilities lie within their workforce. This level of skills visibility enables leaders to quickly identify and reallocate talent with in-demand skills whenever a new challenge arises.
• Improved diversity and inclusion
  Traditional hiring often excludes candidates without college degrees from applying for more advanced roles—even if they have the skill sets the job requires. In contrast, skills-first hiring removes many of the barriers that typically hinder talent acquisition decisions—in turn, empowering employees from all walks of life to apply for opportunities.

4 steps leaders can take to embrace skills-first hiring strategies

Given the benefits associated with skills-first hiring practices, it’s easy to understand why many HR teams are eager to embrace these strategies. If you’d like to put skills at the center of your talent-sourcing efforts, here are a few steps to get started:

#1. Develop a complete understanding of workforce skills
To bring skills-first hiring practices to life, leaders need a baseline understanding of the capabilities their workforce has and any knowledge gaps that are emerging. Traditionally, this information has been hard to come by because skills insights are usually siloed amongst a few different HR systems. Most skills inventories are also updated manually, meaning that the information they present may be outdated or fail to capture the full range of an employee’s capabilities.

Rather than guessing where knowledge lies, companies can harness tools like Gloat’s Skills Foundation to gain an in-depth picture of workforce skills that updates in real-time. The tool uses data from employees’ CVs and LinkedIn profiles to infer skills and proficiency levels. It also takes recency into account to accurately assess how up-to-date various knowledge is.

#2. Identify existing and emerging skill gaps
Once leaders have a clear picture of the skills within their workforce, they can begin to identify where their organizational knowledge is falling short and use these gaps to inform future hiring decisions. Instead of struggling to identify which skills will become increasingly important, tools like Gloat’s Skills Foundation can equip leaders with the insights they need to ensure their hiring decisions are rooted in skills. These systems pull from proprietary sources such as market information and customer aggregates to shed light on the competencies that leaders should require for various roles.

#3. Remove external factors from the equation
While it may be standard to scan an employee’s resume and take their geographic location and educational background into account, this isn’t a best practice for skills-first hiring. Instead, leaders should de-emphasize these factors in favor of matching candidates to opportunities based on the skills they possess. Many companies that practice skills-first hiring use talent marketplaces to compare internal and external candidates side-by-side to pinpoint who’s the best fit for a role based on their capabilities and transferable skills.

#4. Look beyond job titles 
As anyone who’s worked in talent acquisition knows, two candidates can have the same job title and possess vastly different skill sets. While a Marketing Manager at one company may be an individual contributor responsible for social media, at another organization someone with an identical title could be managing a team of five and overseeing all marketing channels.

Rather than using tools that merely scrape similar job titles, leaders that want to practice skills-first hiring must harness AI-powered technology that is trained to identify transferable skills that cross functions. These systems will ensure that executives aren’t just pulling in recommendations for candidates with the same job title, but rather surfacing best-fit applicant matches based on skills and transferable knowledge.

To learn more about the advantages associated with shifting to skills-centric operating models, check out our research report on workforce skills.