April 11, 2024

The Future of Hiring Is Skills-Based

By dropping college degree requirements, employers can tap into millions of skilled workers.

Traditional hiring requirements—prioritizing a college degree or a minimum number of years of 1:1 experience—are hurting both employers and workers. While businesses face a talent and skills shortage, there are more than 70 million workers cut off from the candidate pool simply because they lack a college degree.

This is where skills-based hiring comes into play, offering an effective approach to talent acquisition that promises to deliver better business outcomes.

Problems with traditional hiring requirements

College degree requirements in job postings have become almost reflexive, even for jobs that don’t benefit from a degreed employee. This is commonly known as “degree inflation.”

Degree inflation is a big business loss. A 2017 study from the Harvard Business School found more than 60% of employers rejected otherwise qualified candidates simply because they didn’t have a college diploma. Looked at another way, degree inflation closes job opportunities to the 62% of Americans without four-year degrees, exacerbating labor and skills shortages.

The value of a college degree is increasingly coming into question. Degree inflation will only continue to hurt employers and workers alike.

Understanding skills-based hiring

At its core, skills-based hiring prioritizes proven abilities over traditional, but not necessarily relevant, qualifications.

What does skills-based hiring look like in practice? It involves identifying the key skills and competencies required for a particular role, then using objective assessments and practical skills tests to evaluate candidates based on those criteria. This could include:

  • Work samples that demonstrate skills like coding, writing and analysis.
  • Virtual or in-person skills tests focused on job-specific abilities.
  • Portfolio reviews showcasing similar project work, or similar skills that transfer to the job opening.
  • Skills-based interviewing techniques that dig into how a candidate accomplished particular tasks.

6 benefits of skills-based hiring

Collage of worker portraits
There are 70M skilled workers without college degrees.

Some of the world’s most-recognized companies such as Apple, Tesla, IBM, Delta Airlines and Hilton no longer require a college degree for an interview. For innovative businesses, the benefits of embracing a skills-based hiring strategy are numerous and far-reaching.

A bigger talent pool

A major study cites that 16 million people without college degrees have the skills required for high-wage, high-skill jobs that many employers struggle to fill. Companies that drop college degree requirements tap into a pool of millions of qualified candidates.

Increased diversity and inclusivity

Lacking a college degree doesn’t mean lacking in value. Evaluating candidates based on their abilities directly related to the job ultimately invites a more diverse workforce, which has been proven time and again to benefit financial performance.

Better talent matching

According to TestGorilla survey respondents, 92% of employers feel that skills-based hiring leads to better talent matches. Better job fit leads to higher employee satisfaction and improved productivity—all of which contribute to better business outcomes and a stronger bottom line.

Future-proofing the workforce

The latest business or tech trend today may be outdated tomorrow. A candidate’s ability and willingness to quickly acquire and apply new skills is as important as established skills. Skills-based hiring identifies candidates with the right skills for today and the aptitude and adaptability to grow as business needs evolve.

Reduced time and cost to hire

Traditional hiring processes are time-consuming and costly. The Society for Human Resource Management reports the average cost per hire is nearly $4,700, but many employers estimate the total cost can be three to four times the position’s salary.

Skills-based hiring streamlines the process by identifying qualified candidates more quickly, saving companies valuable time and resources.

Improved employee retention

Employees hired based on their abilities and skills rather than arbitrary qualifications are more likely to feel valued, engaged and motivated. This increased job satisfaction can lead to higher retention rates and reduced turnover costs.

The bottom-line case for skills-based hiring

The imperative for businesses to adapt their talent acquisition is clear. Skills-based hiring represents a forward-thinking approach that not only addresses the talent shortage but also promotes diversity, saves money and future-proofs a company’s workforce. Companies can gain a competitive edge in attracting and retaining highly qualified talent, positioning themselves for long-term success and a stronger bottom line.