Now more than ever, skills-based hiring is at the forefront of business conversations.

While skills-based hiring isn’t new, organizations willing to undergo a company-wide transformation and take a skills-first approach are seeing success with building relevant taxonomies and developing employees’ careers faster than those operating in more traditional models. With a focus on finding the right person for the job by concentrating on their abilities rather than qualifications, skills-based hiring is about who can do the work well—and who has the potential with the right learning and development program—), not who looks good on paper. Yet, research from American Student Assistance shows that despite a strong majority (81%) of employers saying they should prioritize skills and not degrees, many organizations struggle to translate this intent into action.

Overcoming Obstacles to Make the Shift to a Skills-Based Model

Traditional hiring restricts a company’s talent pool by limiting the overall strength and resilience of a company’s workforce, narrowly focusing on education and previous employment experience. In contrast, skills-based hiring breaks down these barriers by prioritizing core competencies, empowering businesses to tap into a wider range of talent, fostering diversity in both thought and approach.

Making the switch to a skills-first strategy can be especially challenging for established companies with entrenched hiring practices because it necessitates a complete shift in perspective. With this change comes a challenge to existing structures, including the intertwining of the talent acquisition and talent management pieces into a cohesive system around the skills engine itself so it doesn’t become an afterthought.

Is It Worth the Effort?

The answer to this question is a resounding yes. Skills-first principles, when embedded properly into the hiring process and wider organization, improve work models that encourage both employee retention and career development. The key is mapping out a total talent model—a long-term strategy for both the internal and external workforce—that drives decision making across all areas of the business. As an added bonus, accoridng to Josh Bersin, companies that have adopted skills-based hiring practices already also boast 31 times higher employee engagement and retention—a key factor of success in today’s competitive landscape.

Skills-based hiring also furthers diversity, equity, inclusion and belonging (DEIB). Evaluating people based on skills and skills potential rather than education furthers equity in an organization by widening talent pools to those who may have been disqualified in the past due to social disadvantages and unconscious bias in the hiring process. Plus, it’s been proven time and time again that diverse teams perform better, achieve financial goals more consistently, and bring more innovative solutions. In fact, companies with above-average diversity in their management report innovation revenue 19% above those with more homogenous leadership, according to BCG.

Ultimately, skills-based hiring isn’t just about finding the right people—it’s about fostering a culture of continuous learning and development, unlocking the full potential of a diverse and adaptable workforce. For example, instead of focusing on whether someone applying for an IT support role needs to be familiar with a specific hardware brand, instead ask if they have the foundational knowledge of troubleshooting techniques and networking principles. This is part of the mindset shift required to successfully implement a skills-based model as people continue moving across industries and careers. And if they don’t know, can they be taught?

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