A skills-based labor market: A welcomed relief for less-experienced job hunters

May 24, 2023 - updated Jan 22, 2024

6 mins

A skills-based labor market: A welcomed relief for less-experienced job hunters
Kim Cunningham

Senior Editor at Welcome to the Jungle

Imagine a world where the worth of a job candidate is not measured by their diplomas, the name of their alma mater, or the number of years they’ve spent in the workforce, but by the actual skills they bring to the table. For many years, the hiring process has been a well-trodden path. Candidates submit their resumes, loaded with their education and experience history, hoping that their credentials will align with what employers are seeking. This traditional practice, often seen as a gateway to employment opportunities, has been unchallenged, but is it the most effective way to assess a candidate’s suitability for a role?

Welcome to a new era of recruitment: skills-based hiring—a progressive approach that puts your skills and competencies at the forefront of your job application. With this outlook, it’s about what you can do, not where you’ve been. As this trend gains traction, it promises to level the job-hunting playing field, creating opportunities based on merit rather than historical prerequisites. Let’s dive in and see how skills-based hiring is making waves in the job market.

The rise of skills-based hiring

The popularity of skills-based hiring is on the rise, and for good reasons. In fact, 76% of employers today use skills-based hiring, according to TestGorilla’s 2022 report on the state of skills-based hiring In a rapidly evolving job market, where new professions emerge, and the demands of existing roles constantly shift, the relevance of traditional indicators of competence—such as education and experience—has started to wane. More and more employers are realizing that these proxies do not always equate to job performance or potential.

Skills-based hiring offers an array of benefits for employers. Firstly, it opens up a wider pool of candidates, ensuring that opportunities are not missed due to overly rigid job requirements. Secondly, it allows businesses to address specific skills gaps in their workforce directly. Also, it promotes diversity and inclusion by giving a fair chance to individuals who might have been overlooked under traditional hiring practices, such as self-taught experts or those with non-traditional career paths.

Data supports this shift towards skills-based hiring. A 2023 OnHires study found that 80% of employers find it hard to fill job openings because of a shortage of candidates’ skills. Another study from Wiley found that 69% of employers are concerned about the growing skills gap. These figures highlight the need for a more targeted approach to recruitment—one that skills-based hiring can provide.

The impact on less-experienced job seekers

Skills-based hiring creates a game-changing environment for less-experienced job seekers, leveling the playing field in a significant way. TestGorilla’s aforementioned report found that 72% of people hired via skills-based hiring are happy in their role. Traditional hiring methods, which often emphasize formal qualifications or years of experience, can be daunting for those just starting their careers or changing industries. By focusing on skills, these individuals are granted the opportunity to showcase their aptitude and potential, despite lacking a lengthy resume.

Removing unnecessary barriers

Consider, for instance, the typical requirement for a degree or a set number of years of experience. In fact, Cengage Group’s 2022 Employability Report found that 62% of all employers still believe a degree is a must-have for their candidates. This is despite the fact that less than 40% of Americans have one, according to the Pew Research Center. While these criteria may help indicate a candidate’s potential, they can also unfairly exclude talented individuals who’ve acquired their skills through unconventional methods, such as self-learning, online courses, or volunteering. In roles where certain skills are necessary but a degree isn’t, these requirements become needless barriers.

Success stories from skills-based hiring

Numerous success stories attest to the transformative power of skills-based hiring. Tech giant IBM, for instance, launched a “New Collar” jobs initiative in 2020 that prioritizes skills over degrees. As a result, nearly 15% of their hires in the United States did not have a traditional four-year degree. Another example is LinkedIn’s Reach Apprenticeship program, which provides software engineering opportunities to non-traditional candidates based on their skills, proving that the approach can successfully uncover untapped talent.

These cases highlight how skills-based hiring not only benefits individual job seekers but also contributes to a more diverse and innovative workforce, underscoring the importance of this hiring trend in modern recruitment practices.

Best-suited roles for skills-based hiring

Skills-based hiring is particularly suited to entry-level positions. These roles often act as stepping stones for those entering the workforce, and a candidate’s potential to grow and adapt can be more important than their existing experience. By focusing on skills, employers can uncover a candidate’s foundational abilities that suggest future success—particularly through soft skills.

Whether it’s a talent for problem-solving, an aptitude for learning new technologies, or strong interpersonal abilities, these skills can make you a great fit for the role—even if you lack industry-specific experience.

Applicability for mid-career transitions

Mid-career professionals looking to transition into a new field also stand to benefit from skills-based hiring. These individuals may have accrued transferable skills that, while not directly related to their desired role, are invaluable in the workplace. For instance, a teacher looking to move into a corporate training role may lack the standard business experience, but they bring a wealth of knowledge about instruction, communication, and curriculum development. A skills-based hiring approach can recognize these transferrable abilities, opening up new career pathways for mid-level professionals.

Ultimately, skills-based hiring shines in roles where agility, adaptability, and potential can be as important, if not more so, than a lengthy resume. This approach allows employers to tap into a broader talent pool and affords job seekers more opportunities to find fulfilling work.

How job hunters can prepare for skills-based hiring

To get the most out of this hiring method, there are ways job hunters can adapt their approach. From application to interview, here are three ways to help you prepare.

1. Showcasing your skills effectively

In a skills-based hiring landscape, it’s vital for job seekers to present their abilities clearly and effectively. Start by identifying the core skills required for the job you’re pursuing. These can often be found in the job description or by researching industry trends. Tailor your resume and cover letter to highlight these skills, providing concrete examples of how you’ve used them in past experiences. Include any relevant projects, volunteer work, or hobbies that demonstrate these abilities.

In fact, a study from Deloitte found that 81% of hiring managers believe that skilled volunteerism should be considered in a hiring decision. The same report found that 76% felt that volunteering made a candidate more attractive from a recruitment standpoint. It’s not just about what you’ve done, but what skills you’ve gained and how you can apply them in the new role.

2. Preparing for skills-based interviews

Interviews in a skills-based hiring process may differ from traditional ones. Employers are likely to pose scenarios or problems and ask you to describe how you’d handle them, allowing them to assess your problem-solving abilities, communication skills, and other key competencies. To prepare, review the job description and list of required skills. Think of instances where you’ve demonstrated these skills and be ready to discuss them in detail.

3. Acquiring and demonstrating relevant skills

If you’re transitioning careers or lack experience in your desired field, consider ways to acquire the necessary skills. Online courses, workshops, and self-guided learning can be valuable. Look for opportunities to apply these new skills, whether through volunteer work, internships, or personal projects. Create a portfolio, if applicable, to showcase your work. Remember, skills-based hiring focuses on potential. Show that you’re eager to learn, adaptable, and committed to your career growth.

Future of hiring: A more inclusive job market?

Skills-based hiring holds immense potential for making the job market more inclusive. It shifts the focus from conventional markers like degrees or job titles to the actual capabilities of the candidates. This can benefit a wide array of job seekers, from those without formal education to career switchers, allowing them to compete on a more level playing field.

Moreover, it may help address systemic biases in hiring by centering the process around demonstrable skills rather than potentially discriminatory factors. This could lead to more diverse workplaces that better reflect the range of talents in society.

Challenges and downsides of skills-based hiring

Although skills-based hiring looks bright for job hunters, it doesn’t come without downsides or challenges. One significant concern is the difficulty of accurately assessing skills, especially soft skills like leadership or communication. There may also be reluctance from employers used to traditional hiring methods, necessitating a cultural shift in recruitment practices.

Additionally, there could be unintended consequences. For example, those who have invested time and money in formal education might feel disadvantaged if degrees become less relevant.

The future of skills-based hiring

As companies continue to recognize the value of a diverse skill set and workforce, the trend toward skills-based hiring is likely to persist. Technological advancements may make skills assessment more accurate and efficient, while changing attitudes could foster broader acceptance of this hiring model.

Nonetheless, skills-based hiring isn’t a panacea. It’s one tool among many that, used judiciously, can contribute to a more equitable job market. As this trend evolves, it will be vital to address its challenges and ensure it delivers on its promise of a more inclusive hiring process.

Photo: Welcome to the Jungle

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