Discover what is skills-based hiring, how it helps businesses succeed and why it’s important in the post-COVID economy.
As businesses navigate economic shocks, they are looking for tools to implement strategies that reduce risk, increase workplace diversity and improve business outlooks. Skills-based hiring represents one such strategy.
Taking steps to change traditional hiring practices to focus more on skills and competencies has benefits: to the company or organization implementing the strategy, to the individual job seeker. It’s also has been shown to improve diversity in workforces and talent pipelines.
In this first installment in a series of blogs based off of the new report by the Foundation for Orlando’s Future titled Re-Imagining Orlando’s Talent Supply: Skills-Based Hiring for Upward Mobility, we explore what is skills-based hiring, how it helps businesses succeed and why it’s important in the post-COVID economy.
What is Skills-Based Hiring?
Skills-based hiring is the process of creating skill-focused job descriptions and judging candidates based on his or her concrete skills. It requires a mindset shift—one that encourages an employer to evaluate an individual’s skills and abilities instead of background, and rethink job requirements.
The three key elements of skills-based hiring are:
- Remove credential requirements when possible. There are multiple avenues to gain skills and to be qualified for a position. Hiring mangers often assume that a degree is the only way to show qualification, however, with only 44 percent of adults age 25+ in Orlando holding an associate degree or higher, this greatly narrows Orlando’s talent pool. While a degree may be required for certain positions, an individual should be evaluated based on what they can do, not what they have done in the past.
- Use competencies specific to the job. When a hiring manager describes a role, they are very competency-focused, and those same competencies should be highlighted on the job description instead of inflated degree and experience requirements.
- Reduce bias. Bias heavily influences hiring decisions. Hiring managers will find the most success with skills-based hiring when they use clear, concise, inclusive language within job descriptions. For example, using the term “energetic” as a job requirement is not skill-based and biases hiring towards younger individuals.
How Does Skills-Based Hiring Help Businesses Succeed?
The advantages of skills-based hiring include filling jobs quickly, retaining talent and raising the bar of qualified candidates by diversifying talent pools. When implemented correctly, skills-based hiring practices will streamline the hiring process through identifying qualified candidates and on-boarding quickly, filling vacant positions faster. Talent is also retained when a potential candidate is equipped for the job and has clear expectations for the job from the beginning.
The Center for American Progress found that it can cost a business up to 21 percent of a person’s salary to replace them. Employee turnover can be one of the biggest expenses on an organization, leaving many organizations to enhance programs focused on employee retention when the problem could be eliminated during the hiring process.
How Does Skills-Based Hiring Diversify New Hires?
Gaps in educational attainment by race persist in the United States and Orlando. Of the adult (age 25+) population, 48 percent of Orlando’s white residents have some form of college degree. Meanwhile only 37 percent of Orlando’s Hispanic or Latino population and 34 percent of Orlando’s Black population have the same credentials.
Skills-based hiring addresses these disparities directly by opening the hiring process to individuals who may have the necessary skills to perform a job but are automatically eliminated from the candidate pool because they lack a formal degree.
In a 2019 case study from PARIN, a skills-based behavioral assessment tool, Roy Cokery the Vice President of customer care at Swisslog Healthcare Solutions found that switching to skills-based hiring naturally shifted employee demographics.
“Previously, our staff was largely white, Gen X or Baby Boomer males. Switching to competency-based hiring increased our age and racial diversity.”Roy Cokery, vice president of customer care at Swisslog Healthcare Solutions
After implementing skills-based hiring, Swisslog’s minority hires increased from 10 to 27 percent.
The Skills-Based Hiring report outlines this strategy in greater detail as well as the specific benefits skills-based hiring offers to service workers such as cashiers, waitstaff, and maids displaced by COVID-19 related layoffs.
Visit Orlando.org/skillsbasedhiring to download the report.
If your company has found success with changing hiring practices to be more skills-based or removing credential requirements in job postings, please contact Senior Director of Talent Initiatives for the Partnership, Danielle Permenter, so that we can share your story.