Future of Work | Skills-based hiring: a practical, modern approach to talent recruitment

Career Guides
Leanne Chee

Hiring talent is difficult, especially in such a competitive pool of job seekers. Candidates with an endless LinkedIn profile detailing how they finished two degrees, are pursuing their masters and have just started their own side hustle seem commonplace nowadays. However, most jobs do not require valedictorians as hires. What’s important is that they can get the job done. As such, strictly traditional hiring approaches are quickly fading in the workplace today, especially with the advent of a technique called skills-based hiring.

What is Skills Based Hiring?

Skills-based hiring is exactly what it sounds like – hiring employees based on the skills they demonstrably possess. This does not mean excluding degree holders from the search pool or lowering a company’s industry standards for job seekers. Rather, it entails expanding the talent pool of candidates to people who may have deviated from mainstream education routes.

A skills-based job search post might look like: “Looking for a web designer experienced in Javascript, HTML and CSS.” Whereas a degree-based job search might include something like: “Required Qualifications: Accounting Degree”.

Why skills-based hiring might be beneficial to the company

The allure of skills-based hiring is a simple and compelling principle. An intimate knowledge of an industry and the relevant skill sets are often more useful to a company than a person’s background. As such, job postings may be phrased in a way that opens up the search for hires to candidates familiar with particular softwares, technology and industry knowledge.

With more candidates, the hiring process is also sped up, which allows companies and industries to evolve faster. An adaptable and up-to-date workforce is especially crucial to a company’s success in today’s rapidly changing world.

Apart from the practical reasons of lowering cost and making it easier to find suitable talent, skills-based hiring is more equitable in that it prioritises the candidates’ skills over their socio-economic background, effectively giving a chance to people from less privileged backgrounds to succeed in the workplace. Not everyone can afford a name-brand education or to stay in school until 25 years if they have an unstable family dynamic or have faced significant life trauma.

Using skills-based hiring to level the playing field not only reflects well on a company’s values, but increases the likelihood of diversity in the workplace. A 2018 article illustrated how businesses with more diverse teams have been shown to tangibly perform better than homogenous businesses. Diversity is a valuable asset, whether in terms of race, religion, gender, cultural diversity or in the case of skills-hiring, varied educational background and life-experience. If everyone can bring something different to the table, the work becomes more robust. It makes sense then, that skills-based hiring improves work quality.

Source: Talentlyft

Are businesses moving towards skills-based hiring though?

In recent months, we have seen a rise in unemployment rates. As of June 2020, we reached an unemployment rate of 2.9% (according to the latest MOM statistics), the highest it has been since 2010. What’s worth noting though, is that degree-holders are not saved from this trend. An article by The Business Times reported that the unemployment rate for fresh graduates in Singapore was 21.6% in 2017, also its peak rate since 2007.

Source: MOM unemployment rates

This divergence from degree-holding hiring tactics may have been influenced by major companies and their CEOs, such as Apple’s Tim Cook and Tesla CEO Elon Musk, who have voiced skepticism regarding the worth of four-year degrees and have advocated for the practice of accepting non-college graduates. This makes practical sense as degree holders are owed higher salaries for the same amount of work. Only picking employees from a degree-owning pool limits the company’s choices and incurs a higher cost if they can hire a person with more relevant experience.

Traditional hiring practices also limit the hiring pool drastically, as young degree holders make up only one demographic of the population. There are plenty of people who have discontinued their tertiary studies, taken a gap year, or chose not to pursue a university education but still possess valuable skills such as coding, digital marketing and writing. Many of them are also just adequately trained for the level of work that job seekers are looking for, which removes the problem of over-qualification.

Oh no! Why am I going to university?

However, that isn’t to say that degrees provided by universities and institutes of higher learning is useless. Skills-based hiring simply recognises that it is not the prestige of the certification that matters, but the proficiency of skills that go in tandem with them.

Source: LinkedIn

For instance, pursuing a law degree does not just entail gaining legal knowledge, but builds transferable skills such as speaking, writing and analysis. A business degree is not purely an accumulation of case studies and theory, but experience in networking, and a deeper understanding of systems and human behaviour.

Hard skills such as writing, coding and data analysis are also versatile skills which are needed in many organisations across industries, making them valuable to master. Universities and IHLs have programmes which rigorously train their students in these skills, making them strong candidates wherever they aim to land.

Many sources have also emphasised the importance of soft skills in the workforce. These soft skills might look like practicing clear and punctual communication, having an accurate analysis of complex problems and having an optimistic mindset, to name a few. Although they are intangible, these assets are common among many people in top-performing positions and are the outcome of constant refinement and practice. The bustling student life provided by a formal education, such as through student clubs or residential hall life, does much to equip young graduates with the soft skills needed to succeed in the workplace. Acquiring these skills, through formal education or otherwise, is essential if you want to advance the career ladder.

Takeaways for the job seekers and the job providers

It remains to be seen whether the shift towards a skills-based workforce is a trend that will continue in the next few years. Universities and IHLs are not going out of fashion anytime soon. However, one thing is for certain: in this talent-saturated economy, purely relying on certifications is not enough; it is more important than ever to acquire relevant and useful skills in order to secure a job. Individuals should constantly be looking to add valuable skill sets to their arsenal and build upon their pre-existing skills.

For the companies looking to increase their relevance and profitability, skills-based hiring is worth looking into. Apart from being quickly adopted by major corporations, it has major potential to help keep afloat the competition, allow you to quickly evolve and introduce more diversity into your team.

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