Key takeaways
- Evolving Job Landscape: The traditional job structure has dominated work execution for over a century. However, with the rapid changes in the work environment, 45% of large organisations now believe that most roles needed by 2030 do not yet exist, highlighting a need for adaptability in recruitment.
- Limitations of Traditional Recruitment: Relying solely on traditional recruitment methods, such as job descriptions and keyword matching, can impede an organisation’s ability to attract top talent with the right skills. Recent research suggests that hiring based on skills significantly predicts job performance more than education or work experience.1
- Rise of Skills-Based Hiring: Skills-based hiring is becoming increasingly important, with LinkedIn’s Future of Recruiting 2024 Report indicating that 73% of recruitment professionals prioritise hiring based on skills.2
- Demand for Transferable Skills: According to the World Economic Forum’s Future of Jobs Report 2023, transferable skills dominate the list of the top 10 most sought-after skills, underscoring their growing importance over traditional ‘hard skills’.3
- Future-Proofing Through Skills Focus: To build a resilient workforce, it is crucial to reengineer job descriptions, implement skills mapping, conduct skills assessments, and invest in agile upskilling programs.
Introduction to skills-based hiring
For over a century, the traditional job structure has dictated how work is executed, by whom, and how it is managed and led. This model has influenced every aspect of HR practices, from hiring and compensation to career progression and performance management, embedding itself so deeply into corporate culture that its effectiveness is rarely questioned. Yet, as the world of work rapidly changes – influenced by digital transformation, globalisation and changing business models – our recent survey of large UK organisations found that 45% think the majority of roles they will need to recruit by 2030 do not exist today.
As a result, many businesses are adopting a new operational model that prioritises skills over traditional job roles. This model centres on identifying and cultivating the skills necessary to drive business success, ensuring that organisations remain agile and competitive in the face of evolving challenges. According to McKinsey, “hiring for skills is five times more predictive of job performance than hiring for education and more than two times more predictive than hiring for work experience.”1 By embracing a skills-based approach, companies can better navigate talent scarcity and achieve their most critical objectives whilst fostering a more innovative, inclusive, and adaptive workforce.
The driving force for change
In today’s fiercely competitive talent landscape, hiring professionals all face the same challenge to attract and secure top talent. This was recently evidenced in Adecco’s survey of UK business leaders, which found that 61% cited skill shortages as one of their main struggles when hiring new talent.
These twin challenges create a significant dilemma for organisations: how can you effectively recruit the skills required when the future landscape remains uncertain? The pace of technological and market evolution means that the skills in demand today may not be the skills needed tomorrow. To compound the issue further, a McKinsey study found that less than half of respondents have a clear sense of their organisations’ current skills.4 Additionally, recent research by PwC shows that more than 35% of workers surveyed said they have skills not clearly evident from their CVs or job histories.5
Relying exclusively on traditional recruitment methods, like job descriptions and keyword-based matching, can hinder an organisation’s ability to secure great talent with the necessary competencies. This approach often impacts crucial recruitment metrics, such as time to fill and cost per hire. Candidates who may appear ideal based on their qualifications or past work experience may not actually be the best fit for the job. Role-specific skills – and equally, skills adaptability and learning potential – can be more critical than traditional criteria.
This is where the concept of skills intelligence directly comes into play, as organisations can leverage data analytics and insights to understand skill trends, gaps, and requirements within their company and across the broader labour market. This intelligence helps businesses and individuals align their capabilities with current and future needs, making it a crucial element in modern talent acquisition. It’s no longer a mere option or a “nice-to-have” but a must-have, forward-looking strategy in hiring. Skills intelligence can help organisations realign their hiring processes by achieving the following:
Improving recruitment metrics
As recruiters and hiring managers leverage skills intelligence platforms’ predictive and prescriptive analytical capabilities, they can gradually experience improvements in recruitment metrics including time-to-hire, diversity ratio, recruitment funnel effectiveness, cost per hire, selection ratio, and time to productivity.
Using data rather than intuition
Traditional talent acquisition can be influenced by intuition, subjectivity, and bias, potentially impacting the selection of the most suitable candidates. Skills intelligence transforms intuition and personal judgement into data-driven criteria, streamlining the talent acquisition process.
Gaining a competitive edge
Skills intelligence platforms help organisations move away from outdated hiring practices, allowing them to outperform competitors. By constantly innovating talent acquisition strategies, securing vital skills, and overcoming talent shortages, these platforms can help organisations position themselves ahead of their peers.
Effective skills matching and candidate selection
Skills intelligence platforms enable organisations to effectively match candidate skills with job/role requirements. This simplifies candidate benchmarking and selects candidates who not only meet the basic criteria for a role but also possess competencies to excel in the position. This alignment of skills and requirements helps improve employee and manager satisfaction, reduce employee turnover, and build a competitive and agile workforce.
Enhancing candidate experience and engagement
Skills intelligence platforms not only improve the hiring manager experience but also a candidate’s experience and keep them engaged throughout the talent acquisition process. They provide personalised recommendations, streamline the application process, enhance visibility, and offer networking opportunities. This, in turn, encourages more candidates to apply for the role and increases the relevant talent pool.
Source: The Skills Intelligence Technology Landscape, Everest Group (2024)
Why is skills-based hiring growing in popularity and importance?
Skills-based hiring is rapidly gaining traction. Recent survey data from LinkedIn’s Future of Recruiting 2024 Report shows that 73% of recruitment professionals say hiring based on skills is a priority.2
One key benefit of skills-based hiring is its ability to significantly widen the talent pool. By eliminating barriers such as specific industry experience, personal networks, or rigid qualification prerequisites, organisations can quickly tap into a diverse array of potential candidates. This broader talent pool brings multiple advantages, including the opportunity to engage with otherwise well-suited, yet excluded talent and cultivate a more inclusive workforce.
According to a recent survey of 1,500 employers and 1,500 workers by TestGorilla, findings also suggest that skills-based hiring brings measurable advantages across the recruitment process, delivering significant benefits for organisations and their employees:6
88%
Experienced a decline in mis-hires
23% of employers reported that mis-hires were more than halved
74%
Reported lower cost-to-hire
16% of employers reduced their cost-to-hire by over 50%
82%
Achieved faster time-to-hire
19% of employers accelerated their time-to-hire by more than 50%
89%
Increased employee retention
23% of employers reported improved talent retention by at least 51%
Source: The State of Skills Based Hiring, TestGorilla (2023)
Focusing on skills, paired with a culture of continuous learning, is vital for bridging skills gaps and creating a more adaptable workforce. This approach allows teams to scale hiring effectively and helps them achieve their recruitment objectives more efficiently.
Executives and workers want a new approach to jobs and work
“What do you believe is the best way to organise work to create value for workers and the organisation?”
Business executives
Workers
Fractionalised work: Workers who flexibly flow to tasks, assignments, and projects based on their skills and interests
Broadened work: Structuring worker roles and responsibilities around broad problems to be solved or outcomes to be achieved
Many workers feel their employers value job experience and degrees over skill
But workers want skills-based practices and will vote with their feet to get them
Five ways to reframe your approach to focus on skills not titles
1. Understand the skills you have and the skills you don’t
Recognising and addressing skills gaps within your organisation is a critical first step in any skills development strategy. By pinpointing areas where your workforce needs enhancement in skills and knowledge, you can proactively bridge these gaps. This may involve rolling out targeted training programs, hiring external specialists, or collaborating with educational institutions to offer relevant learning opportunities.
The top emerging way to do this is to build a skills ontology, which serves as a sophisticated framework for organising and understanding the skill sets of your employees by categorising skills according to three areas of intersection:
• Which skills relate to each role.
• How these skills relate to each other.
• How the skills relate to different roles.
Enhanced visibility of your employees based on their skills profile can play a crucial role in strategic talent acquisition, management, and workforce planning. Skills ontologies quickly highlight your organisation’s skill hierarchy and the skills required for individual roles. They can also highlight skills gaps that need addressing.
2. Reengineer job descriptions
The aim is to define the essential skills crucial for initial success rather than those deemed merely “nice to have” or achievable solely through extensive on-the-job experience. These additional skills might obscure critical job requirements and potentially dissuade qualified applicants.
To begin with, engage with hiring managers to identify specific indispensable skills for new hires to effectively perform in the advertised role and establish a realistic timeline for demonstrating these skills. Emphasising these core competencies is vital, as some skills can be developed while employees gain experience on the job, and this should be relayed to applicants in the job description to emphasise an organisation’s positive approach to development. Once you have this information, you can update job descriptions to focus more on essential skills rather than an exhaustive list of requirements, which could dissuade potentially favourable candidates from applying.
3. Identify and target transferable skills
Another key element of fostering a skills-based hiring process is identifying transferable skills and creating accessible opportunities. Instead of limiting focus to specific job titles or qualifications, organisations can seek skills that can be applied across various roles and industries. This approach broadens the talent pool and promotes a more flexible and dynamic workforce. Transferable skills – rather than traditional ‘hard skills’ – populate all 10 of the most in-demand skills according to the World Economic Forum’s Future of Jobs Report, 2023.3
Knowing these skills and how to assess and develop them could be a key differentiator for success in a highly competitive talent landscape.
Top 10 skills of 2023
3. Resilience, flexibility and agility
4. Motivation and self-awareness
5. Curiosity and lifelong learning
6. Technological literacy
7. Dependability and attention to detail
8. Empathy and active listening
9. Leadership and social influence
Note: The skills judged to be of greatest importance to workers at the time of the survey
Source: Future of Jobs Report, World Economic Forum (2023)
4. Implement skills assessments
Implementing employee assessments as part of the hiring process can effectively screen candidates for the skills and capabilities required for a specific role. These assessments can vary from written tests and practical exercises to behavioural interviews. By conducting assessments, hiring professionals can ensure that candidates are evaluated based on their abilities rather than solely on educational background or previous job titles. This approach enhances the likelihood of selecting candidates with the necessary skills to excel in the role.
5. Adopt an agile approach to skills development
Whilst upskilling and reskilling initiatives remain high on many organisations’ agendas, traditional large-scale programs are time-consuming and expensive and often do not deliver the desired results. This is evidenced in LinkedIn’s latest Workplace Learning Report, which found that 91% of these programs are still in the planning and activation phase for the third consecutive year, with fewer than 5% advancing enough to measure success.7
Adopting an agile approach to learning and development involves creating flexible learning paths that allow employees to choose training modules tailored to their specific needs and career goals. This adaptability not only accelerates skill acquisition but also enhances employee satisfaction and retention by providing personalised learning experiences, all whilst minimising the timely and expensive burden of large-scale training programs.
Contact Adecco
Skills-based hiring will inevitably become an essential part of corporate hiring strategies. To understand more about how Adecco could help you with this, please get in touch with us: