The Impact of Skill-Based Hiring on Traditional Hiring Methods

Skill-based hiring made finding the right person for the job a lot easier.

Nowadays, looking into traditional indicators of knowledge and experience is merely step one. Hiring professionals have started to look into more specific, diverse skill sets, and measure them against the tasks they’ll need to handle in their potential roles.

In return, workplaces have filled with better-qualified people and employee turnover rates shrunk — and we all know how expensive a bad hire is (for those who don’t, it’s about $14.900).

So, let’s dive into this modern hiring practice and see all the ways it improved the traditional hiring paths for both employers and employees.

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What is skill-based hiring?

Skill-based hiring is a hiring method that prioritizes candidates’ practical skills, knowledge, experiences, and competencies.

Rather than strictly relying on formal education, courses, and continuity of previous roles, this approach also evaluates both hard and soft skills, as well as the affinities potential hires show in private lives (i.e. hobbies).

So, it’s what you *can* do instead of what you were taught to do.

With a college education and student loans becoming increasingly unaffordable, many people decided to embark on career paths that don’t require college degrees. Self-educated marketing, tech, and data professionals, as well as artists of many kinds, have built successful careers while having no college education, or leaving it behind to do something else.

Naturally, the hiring practices followed — and hiring managers took upon hiring based on skills instead of requesting candidates have specific educational backgrounds.

The COVID-19 pandemic notably sped up the adoption of skill-based hiring.

The workers stuck at home during the pandemic had time to reflect on their careers and upskilled/reskilled accordingly (when not doing fitness challenges and baking banana bread, if you recall).

The difference between traditional and skill-based hiring

Traditional hiring methods put formal education first. Additionally, they chose the “safer” way and give priority to candidates with linear career paths, and similar roles in their job history.

On the other hand, skill-based hiring also takes soft skills, attitude, and only seemingly unrelated knowledge and affinities into consideration. 

LinkedIn revealed how important it is to have a broader perspective when hiring!

In 2020, LinkedIn rolled out its Career Explorer and encouraged users to browse LinkedIn Learning courses to help with the transition to new jobs. 

They mention an interesting finding: “a food server in the U.S. has a 71% skills similarity to customer service specialist”. It only takes a skill or two for a food server to learn and confidently apply to a customer service role!

This practical example shows the main difference between traditional and skill-based hiring.

When traditional hiring ruled the HR world, it was almost impossible for a waiter to become a sales rep. Nowadays, employers know that hospitality workers have key people-listening skills and patience. Anything they lack can be compensated by quality onboarding. 

How skill-based hiring changes the long-established recruiting landscape

The talent pool got wider, richer, and more diverse

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Instead of having a narrow pool of candidates that formally have what it takes, recruiters can now expand their horizons.

Following the hospitality-to-sales transition mentioned earlier, there’s more to look for in an employee with skill-based hiring. The groups previously looked over without consideration now have a fair chance to compete, based on their competencies. In return, employers can take a candidate with the right attitude and shape them into an ideal employee and a true company asset.

The hiring and onboarding process became more efficient

With skill-based hiring, you get what you look for and get it faster than with traditional hiring and recruiting.

This technique carefully examines the position a company is hiring for. Then, the necessary skills are highlighted at every interview step: job posting, questionnaires, interviews, and theoretical/practical knowledge assessments. For example, if they’re hiring for a Sales Development Representative, hiring managers won’t just look for someone with “good communication skills” — that’s uselessly vague. Instead, you may expect a precise job description like this example from LinkedIn Talent Solutions:

Source: business.linkedin.com

In comparison to the traditional process, hiring with specific skills in mind (and on paper) will leave you with few surprises.

New hires still need some time to learn the intricacies of a new workplace. Adapting to a different company culture, schedule, tools, and tasks is inevitable for newcomers, and high-quality onboarding should help overcome that. Be sure to cover all of the scenarios they may encounter in the workplace, and provide them with a comprehensive knowledge base they can refer to if they have any questions. 

Still, putting skills first when talent sourcing will result in a higher number of candidates who are ready to take on their duties from the first day. They can pick up the onboarding tasks as they go, and transition into their new role with ease.

Candidate assessments became more complex

Instead of trusting what’s listed in CVs, employers will carefully vet the candidates in the final rounds.

Nobody will take your word for granted; skill assessment efforts were never this elaborate:

• • Companies are hiring HRs who niched down to specific categories. Knowing the intricacies of, for example, front-end development, tech recruiting pros will know exactly what to look for and how to assess the candidates.
  • Employers often outsource hiring completely. Some take a step further and hire specialized recruiting companies that are deep into skill assessment, and honed the hiring/onboarding process to perfection.
  • Candidate assessment tools are on the rise. DevSkiller, HireSuccess, IndeedAssessments, and other tools provide customizable and ready candidate assessment solutions. The recent AI boom will only facilitate the process further!

• Expect test tasks before receiving an offer. SMBs and startups are practical and let their existing teams vet the candidates; you will likely receive a test task from your future senior coworker.

Decreased employee turnover rate

More efficient, precise, and fast — skill-based hiring decreases the employer turnover rate and costs of mismatched hires who fled, or were fired.

Hiring based on skills demands employers create an elaborate Ideal Employee Profile. With that in mind, it will be hard for recruiters to miss and bring someone unqualified along.

The bottom line

Skill-based hiring is a modern and more efficient way of candidate sourcing and hiring. 

Traditional hiring puts formal education first and prioritizes people with comfortably similar job histories. On the other hand, skill-based hiring considers everything the employee knows and can put to use in the new role. This includes hard skills and soft skills, tricks they’ve picked up from different walks of life, preferences, and even hobbies.

The shift toward skill-based hiring was mostly stimulated by the pandemic and the high costs of college education but is here to stay. As a result, companies recorded decreased employee turnover, more efficient hiring, and a noticeably wider talent pool to choose from.