Skills Based Hiring: What It Is & Small Business Benefits
This article is part of a larger series on Hiring.
Skills based hiring is the process of finding new talent by focusing on a candidate’s skills rather than educational achievements or previous work experience. For example, if you conduct a pre-employment assessment to gauge an applicant’s proficiency in the skills necessary for your open role, you’re already using a skills based hiring approach.
Shifting your focus to relevant skills can give your small business access to a larger applicant pool, speed up the hiring process, and improve retention rates.
How Skills Based Hiring Works
Skills based hiring looks at the individual worker and what specifically they bring to the organization in terms of skills. Instead of trying to check off boxes and fit a worker into a very specific and detailed job description, skills based hiring attempts to identify and focus on the skills of each applicant.
If your small business is ramping up hiring and considering a move to skills based hiring, you need to know how to integrate that into your hiring process. There are four principal items to consider: job descriptions, pre-employment assessments, interviews, and job boards.
Pro Tip: Nearly any industry can benefit from skills based hiring, but some industries and jobs may be particularly suited to the process. They include:
- Retail sector
- Restaurant and food service workers
- Customer service
- Information technology (IT)
- Entry-level positions
- Administrative and secretarial work
Many of your job descriptions probably have degree requirements or at least mention that a relevant degree is preferred. In some cases a degree is necessary (i.e., doctor, lawyer, accountant), but many jobs need no more than a high school diploma.
Rewrite your job descriptions to focus on the skills necessary to perform the job. Highlight responsibilities and daily duties. Focus on the results you need from someone in the job. Doing this will expand your applicant pool.
For example, if you are hiring an administrative assistant, part of your job description may look like this:
Skills and Qualifications:
- Reporting and spreadsheet skills
- Communication and writing skills
- Microsoft Office knowledge
- Organizational skills
- High school diploma or equivalent
- X years of admin assistant experience
Did You Know?: Nearly half of all middle-skill job postings have reduced or eliminated degree requirements. High-level positions also saw a drop, though to a lesser degree.
When screening candidates before an interview, many employers look to see if a candidate has a degree. If they don’t, the employer rejects the candidate.
Instead of looking for a degree, give applicants a pre-employment assessment. This will test their skill level, showing you their proficiency in one or more of the key skills required to be successful in the position. About three-fourths of employers, in fact, are using some form of skills based hiring to identify talent, with almost 55% of them requiring job-role-specific skills assessments.
For example, pre-employment assessments for an administrative assistant may include:
- Proficiency tests for Microsoft Office, including Word, Excel, PowerPoint, etc.
- An organization skills test
- Time management skills assessment
Looking to streamline your assessment process through software? Check out our guide to the best pre-employment assessment tools for options.
When interviewing applicants, you need to stay focused on the skills necessary for the job. Using a structured interview approach, your questions should focus on the candidate’s skills and experience.
Always keep this single question in mind during interviews: Does the candidate have the skills needed to be successful? That should guide your interview questions and keep them clearly focused on the skills needed for the job, giving you the chance to dive deeper into the results of their pre-employment assessment.
For example, when interviewing for an administrative assistant position, ask the following questions:
- What are your strongest areas of expertise?
- What skills do you possess that will help you thrive as an administrative assistant?
- Describe a challenging project you’ve worked on in the past and what steps you took to make the outcome a success.
A job board can help you find new employees by providing skills based assessments throughout the hiring process. Here are a few examples:
- Indeed: Allows you to require a pre-employment skills assessment before a candidate applies so you can screen their resume and test results. Indeed has 110 skills tests, so you’re bound to find one that fits the position you need to fill. Indeed will also match candidates’ resumes with skills posted in your job ad, showing you which workers may be the most qualified.
- ZipRecruiter: Offers screening questions that candidates must answer when applying. Choose from open text, multiple choice, yes/no, date, number, and file uploads. You can choose from pre-populated questions or write your own. If you write your own, make sure you don’t ask any illegal questions.
- LinkedIn: When posting a job, you cannot require a skills assessment before someone applies. But you can see a badge on an applicant’s profile showing their skill proficiency in a key area for your job. Interested candidates can take hundreds of different skills tests, which will help you find them when searching and show their skill level when they apply.
Need help with hiring? Use our step-by-step guide on how to hire new employees.
Benefits of Skills Based Hiring vs Degree Hiring
A college degree does not guarantee that someone will be prepared to do certain jobs or will be better than someone without a degree. Reducing this barrier and focusing instead on a candidate’s demonstrated skills and competencies opens up opportunities. This benefits both employers and employees.
Skills based hiring can expand your applicant pool; lead to faster, cheaper hiring; and increase retention.
Expanded Talent Pool
Skills based hiring is used by many small businesses because it vastly expands the applicant pool. Specifically for entry-level positions, a degree is rarely required. According to the Bureau of Labor Statistics, more than 60% of working adults over the age of 25 do not have a four-year college degree. By requiring even an associate degree, let alone a four-year degree, companies are backing themselves into a corner and reducing the available applicant pool.
College degrees do not guarantee a job-ready skill set. By eliminating the degree requirement or at least making it preferable instead of required, small businesses open up many new doors to expand their talent pool and get someone on the job with the skills necessary to be successful.
Did You Know?: Most employers (91%) see an increase in workforce diversity when a skills based hiring strategy is put into place.
Reduced Costs & Faster Hiring
When you’re hiring, you or your hiring manager will need to dedicate many hours to reviewing resumes, interviewing candidates, onboarding, and training the new hire. If you hire someone who has the skills necessary to do the job (regardless of degree or previous experience), you can get through the hiring process faster and reduce the amount of training you need to provide. This also reduces your hiring costs and enables your new hires to start making an impact more quickly.
Did You Know?: More than 90% of employers that use skills based hiring saw reductions in cost and time-to-hire.
Attracting and retaining top talent presents challenges for all companies, especially small businesses. Anything you can do to help keep employees at your company will reduce your overhead and increase employee morale and productivity.
Hiring someone with a degree may seem like a good choice with regard to long-term retention. However, an older yet oft-cited study from Harvard Business School found just the opposite. Workers with college degrees typically have a shorter retention time than colleagues without a degree. By reducing or eliminating the degree requirement, you could increase your employee retention.
Skills based hiring is perfectly suited for entry-level and middle-skill based positions. Most of the time, a degree isn’t required and only complicates and slows down your hiring process. Skill based hiring can cut your costs and increase your employee retention rates, making for a more enjoyable and profitable business.