How skills-based hiring is changing the way we recruit

by in Talent Attraction

In a market characterised by labour shortages, where people are increasingly making career switches and university is not a viable option for a huge range of different people, skills-based hiring is becoming widespread – and for good reason. Wave’s Emily Buckley investigates what skills-based hiring is, the benefits of the model, and how to pivot your recruitment process to put it into practice.

Once upon a time, if you wanted a well-paid job in a ‘white collar’ role you needed to go to university if any employer was going to take you seriously. Recruiters would specify a degree qualification for most professional roles and would disregard any CVs that didn’t list a degree, regardless of anything else on that CV. Thankfully, those times are rapidly fading and an emphasis on skills is superseding qualifications in a huge range of industries. Skills-based hiring is a more holistic approach which takes into consideration everything a  candidate could bring to a role, including potential. It’s a model that’s gaining traction for a number of reasons so we look at what it is, what the benefits are, and how to create a skills-based hiring process.

How the market has changed

This month thousands of students across the UK are packing up their bags, chucking their newly bought IKEA throws into the car and heading to university for the first time. Thousands more have recently graduated and are now entering the world of work. A university education has for so long been the end-point to sixth form that schools often blindly pushed as the only route to career success. Whilst a university education can be the right path for some, a successful career can be achieved via number of different routes and university is not the right route for everyone.

Recently, there has been an evident shift both in the thinking around university education and how we evaluate whether a candidate is right for a particular job. This has been brought about by a number of factors, from the ever-growing mountain of debt many university students graduate with (creating barriers to further education for an entire section of society, especially in a cost of living crisis), to a move to an emphasis on skills-based hiring.

Big firms are now considering or are actively actioning a removal of a degree requirement for jobs in the hope they will attract greater diversity. An emphasis on skills, however they have developed, is beginning to take root. Some of those skills may have been fostered at university, but they could equally have been learnt in a myriad other ways. The important thing that needs to be considered in the early stages of the recruitment process is, “can this person do or learn to do the job based on the skills they possess.”

A shift to skills-based hiring

Skills-based hiring is rapidly growing momentum in a world where labour shortages remain a challenge, cost of living is making university unaffordable for many, apprenticeships are becoming more commonplace across a range of industries and where there’s a growing desire to foster more diverse workplaces. Employers and recruiters are quickly understanding the benefits of hiring for skills rather than qualifications or previous roles held.

For many years, a university degree was an indicator of talent, a way to filter applications at the earliest stage. However, data would suggest that is beginning to change. Wave has found a 19% increase from 2019 to 2022 in those not advertising any qualification requirements and, of those that do, there’s a huge 104% increase in jobs advertised without the requirement of a bachelors degree. LinkedIn data backs this up, showing a 90% increase in the share of UK job postings on the platform not requiring a degree from 2021 to 2022. LinkedIn’s Future of Recruiting Report 2023 also found that 75% of recruiters believe that skills-first hiring will become a priority over the next 18 months and that recruiters are five times more likely to search for new hires by skills rather than higher education qualifications.

A huge range of companies, including some of the big multinationals, are now thinking more broadly about how they hire. Fewer than one in five IBM jobs now require a degree, and Kellogg, Accenture, Dell, Google and Tesla are operating similar hiring practices. Indeed, alongside a decrease in the requirement for a degree, Wave data has found a 75% increase from 2019 to 2022 in the requirement for vocational qualifications – training and qualifications related to a specific job, sometimes undertaken in sixth form college, and sometimes on the job.

What defines skills-based hiring

Skill-based hiring is sometimes referred to as skills-first hiring, i.e. you look at a candidate’s skills before anything else. It’s a change in focus from qualifications and set experience to the skills a person might bring to the job. This is especially pertinent for recruiters that use tech to screen CVs for things like certain qualifications. They may not ever see the CV of a candidate that didn’t have the qualification required but had a skillset that would make them a great fit for the job. Of course, there are jobs whereby a degree is a requirement for a good reason – no-one wants to go to a doctor without a medical degree, for example. But, for many roles, a degree might not be strictly necessary if a candidate has acquired skills in non-traditional ways.

The benefits of recruiting based on skillsets

Skills encompass a vast range of valuable measurements, such as capabilities, abilities and aptitude, as well as ‘knowing how to do something’. A candidate might have gained those skills in a host of different ways but what’s important is that they possess them, not how or where they developed them. Skills-based hiring facilitates this approach and has numerous benefits, including:

  • Enabling a more diverse workforce – A focus on educational achievement feels at best outdated and worst elitist. That’s not to say that degrees offer no benefits and most companies will appreciate degree qualifications still, but a shift to skills and potential means opening up your pool to those who, for whatever reason, didn’t go to university. This will widen your search to those from a broad range of socio-economic backgrounds as well as neurodiverse individuals for whom university is not a viable pathway. It removes barriers for a huge number of people who possess a trench of business-critical skills and increases the diversity of a business’ workforce, leading to greater diversity of thought and innovation.
  • An appreciation of lifelong learning – We’re also entering into a world whereby technology is rapidly changing and developing, often at a faster pace than university teaching, so graduates won’t always have gained the skills needed for a role purely from their degree. Lifelong learning is now becoming critical and without a skills-based approach to hiring, the skills picked up along a career (which may also not be linear) could be missed.
  • A way to ease labour shortages – A skills-first approach could also help to plug the gap caused by labour shortages. Once you remove barriers to work, you open up the pool hugely, allowing those with the skills to do the job – however acquired – to apply and progress. As finding qualified candidates remains an ongoing challenge for recruiters, re-thinking traditional recruitment strategies and overhauling outdated mindsets could prove to be vital. As well as opening up roles to candidates without a university education, it will mean those that perhaps do have a degree in another field but want to pivot into another industry can do so. There are many transferrable skills that could allow people to work in an entirely different sector even if they don’t have direct experience or qualifications.

The most in-demand skills

LinkedIn’s latest Future of Work report found that 92% of US executives think people skills are more important than ever and part of this is down to the rapid expansion of AI. In a world where AI can perform so many tasks with rapidly growing sophistication, innately human skills become even more important. And human skills are not something that a degree alone can demonstrate. Wave data has found that four out of the top five most in-demand skills are people skills, with communication being the number one skill listed on job ads. Others include administration, management and organisational skills.

The fastest-growing in-demand skills in job listings on LinkedIn since November 2022 include communication, flexibility, professional ethics, social perceptiveness, and self-management. The most recent Future of Jobs Report (published by the World Economic Forum) found that critical thinking & analysis and problem solving are rising in importance, with many companies believing those skills will be in the top five by 2025. Of course, these are all skills that a university education can help foster but a degree is by no means the only way to develop them.

How to change your recruitment model

Changing the way you recruit might feel daunting but the benefits are huge and much of the change begins with an altered mindset at each stage.

Job adverts – Firstly, a different approach to job ad creation is needed. Taking the time to think about what the role requires and what skills are therefore needed is crucial in order to attract the right candidates. Work closely with your clients to perform a skills analysis, identifying the technical, hard and soft skills that are vital for a particular role. There will often be hard skills required, such as experience with a certain type of software, fluency in another language, or a license to use specific equipment, but also list the soft skills that would make someone great for the role. Do this and you’ll open your role up to a range of talented candidates that would have otherwise scrolled past your job ad or not seen it at all.

Applications – Look for a tailored application rather than a copy and paste job that might have been sent off to multiple companies with similar roles. That illustrates an understanding of the role and what’s required, plus is indicative of a great work ethic. Experience – especially that which has been created by the candidate in innovative ways – is a fantastic measure of problem solving and innovation.

Interview – Incorporate a skills assessment as part of the interview process to accurately measure all the different skills a candidate possesses. This might look like structured questions to identify knowledge of different areas, examples of work or life experiences that demonstrate the skills you have asked for, and possibly a final interview phase that incorporates an exercise related to the job that allows them to show the skills needed for the job. Be sure to ask questions that elicit answers that demonstrate a candidate’s skills. Behavioural questions, those that ask candidates to tell you about a time when x happened, allow them to talk about specific occasions when they have exhibited certain skills. Motivational questions, meanwhile, will help you to gather details on how a candidate responds to situations, giving you an inkling of their mindset.

Apprenticeships as a barometer of talent

In order to move from the mindset that a university degree means that one candidate is ‘better’ than another, we need to start appreciating apprenticeships as a measurement of skill and experience. Apprenticeships are a fantastic alternative avenue into work for a wide range of people, at all stages of their careers. They can train and upskill young people who want or have to go straight into work rather than enter into higher education but are also a valuable gateway for career switchers and older workers for whom retirement isn’t an option. Once largely only available for technical industries, there are now apprenticeships across a broad spectrum of sectors, from accountancy, to IT and technology, to creative and design and many more in between.

And apprenticeships don’t have to be exclusive of a university education either – the number of degree apprenticeships, which enable people to gain an undergraduate or master’s degree whilst working, getting industry experience and earning a salary, has grown hugely in the past few years. A recent report undertaken jointly by the Prince’s Trust and LADbible that surveyed 16-24 year olds found the cost of living crisis had forced over a quarter of the young people questioned to either leave education or start thinking about leaving it. Apprenticeships and degree apprenticeships can often offer young people a more viable gateway to learning and work. Given by 2030 75% of the workforce will be Gen Z, these young people will be forcing recruiters to adapt the way they recruit.

For recruiters, apprenticeships can be another barometer of skills, experience and that catch-all word, ‘talent’. In many industries, across many roles, a university degree is not the only means of assessing a candidate’s suitability for a job. And in some industries, candidates are speaking with their applications. Wave data has found increases in applications for jobs requesting vocational qualifications largely across the board but most significantly in Education and Engineering & Utilities – industries whereby learning on the job is often more valuable than purely learning by theory. This all strengthens the need for a skills-based approach to recruitment.

This article was originally published on on the 25th of September 2023