More organizations are moving toward skills-based hiring and getting mixed results. Here’s how to avoid some of the pitfalls.

Lisa Morgan, Freelance Writer

March 20, 2024

7 Min Read
Wooden blocks with arrows. Growth, development progress concept. Achieve success. Career promotion. Step by step. improving skills. Goal achievement.
Mohd Izzuan Roslan via Alamy Stock

Skills-based hiring can be a blessing or a curse, depending on how it’ s implemented. Before the pandemic, the speed of business was already accelerating continuously. The pandemic followed, forcing companies to become an extreme form of agile. Both those trends remain true today. 

So why skills-based hiring? It makes the organization more agile and resilient, and it provides employees with greater opportunities for growth. 

“The traditional way of working isn’t flexible or responsive enough for the many rapid changes we’re experiencing,” says Janice Burns, chief transformation officer at learning and upskilling platform provider Degreed. “With skills-based hiring, all you need to do is break your job descriptions down into the tasks that need to be done and then look at the skills [required] for those tasks ... If it’s done as a silo, then it won’t offer all the benefits that skills-based organizations can bring.” 

According to a Deloitte report, organizations embracing skills-based hiring are: 

  • 52% more likely to be innovative, 

  • 57% more likely to be agile, 

  • 107% more likely to place talent effectively, and 

  • 98% more likely to retain high performers and have a reputation as a great place to grow and develop. 

“As automation and artificial intelligence reshape the workforce, the specific skills required for success are constantly changing,” says Vit Koval, global hiring and remote work advocate at B2B ecommerce platform provider Globy in an email interview. “To maximize the benefits of skills-based hiring, companies should foster an environment that encourages continuous learning and skill development. This approach ensures that employees remain relevant and can grow alongside the business, addressing both current and future needs.” 

Related:How to Build an Effective IT Training Program

Skills-based Hiring Helps Level the Playing Field 

In traditional hiring, one looks for degrees as evidence of expertise. Particularly in IT, technology is changing so quickly that one must mindfully inventory skills and fill the gaps on a continuous basis. It’s a process, not a destination. 

“We probably did the wrong thing at first, like everyone did. We went after more data scientists and coders that understood Java, but our hit rate was getting worse and worse,” says Antoine Shagoury, CTO at IT services provider Kyndryl

So, the company started inventorying skills, focused on seven different types of professions in the organization, including consulting, critical thinking, analytical, engineering and software development skills. The exercise helped teach Shagoury and others how they could advertise for talent while providing career trajectories for team members that otherwise didn’t have much of a career path or growth opportunities. 

Related:How to Navigate the Layoff Culture

“When we split from IBM, just under 90,000 employees came with us. We have thousands of technology managers, thousands of project managers and thousands of analysts, but if you asked them what they did versus what their title was, the divide grew exponentially,” says Shagoury. “[At the time] we were changing the HR management systems, HR processes and even the teams joining the company, like a lot of HR talent, so it became a mutual journey and the talent process became very strategic.” 

Kyndryl also got outside assistance to think through the problem because Shagoury and others wanted to explain exactly what they needed. So, instead of saying something broad like “I want someone with healthcare industry expertise,” the team started breaking down the language of what they sought.  

The company also created a university-like program for skills development that is attended by thousands of “students” on an ongoing basis. Meanwhile, the traditional focus on technology-specific roles like Java developers morphed into full-stack developer conversations, so those working on the back end could also develop on the front end and vice versa. That was followed by another shift from full-stack development to “business capable,” meaning they understand how what they’re doing benefits the business or customers. 

Related:IT Security Hiring Must Adapt to Skills Shortages

Expect Pushback 

Constantly changing business and technology environments require individuals to be more adaptable and resilient, yet humans still naturally resist change. For example, when Shagoury first started inventorying skills, requests were sent out to about 1,000 employees, but only 15% to 20% responded. 

Shagoury didn’t understand why, so he asked in a meeting and then suggested the pilot group think of the skills inventory as an internal LinkedIn, where employees could share their skills. However, the first question was, “Are you going to fire me if I don’t have the skills you’re looking for?” 

Then, the scope of naysayers expanded to other organizational leaders who didn’t want their employees sharing their skills outside the local fiefdom. Customers also voiced concerns because they were comfortable working with Kyndryl consultants as-is. Some assumed the change was driven by cost reduction, though a couple of organizations asked Kyndryl to present what it was doing to HR and talent teams because they realized the skills-based approach was becoming increasingly necessary and they, too, needed assistance. 

Degreed has also adopted skills-based hiring and processes. 

“Our approach to hiring is based on a skills-first philosophy where we work with the hiring manager to identify the critical skills required for each of our open jobs and include those skills in the job description,” says Degreed’s Burns. “During the interview process, we focus on the candidate’s critical skills and experiences, and ask them for examples that demonstrate how they have leveraged those skills in various scenarios and environments to accomplish critical tasks.” 

That approach has helped Degreed identify unconventional candidates, especially in IT, no matter where or how they developed their skills. The result is a more equitable and inclusive approach to hiring and a widening of Degreed’s potential talent pool. 

Skills-based hiring also helps minimize unconscious bias in the HR process when done correctly. 

“If there is a clearly defined list of hard and soft skills needed for the role, and you have the tests in place to measure these skills, you will be purely evaluating based on the results of the tests. [That] can significantly decrease the change of unconscious [bias] playing a part in decision-making,” says Matt Collingwood, managing director of tech recruiting agency VIQU in an email interview. 

Skills-based Hiring Alone Doesn’t Work Well 

Skills-based hiring provides benefits, but to realize more complete benefits, organizations need to back up skills-based hiring with upskilling and reskilling. 

“[S]kills-based hiring alone is almost pointless, because what happens after you’ve hired someone based on their skills? You need to continue to develop them, with skills-based learning, and to challenge them with new work opportunities through a skills-based talent marketplace,” says Degreed’s Burns. “...Without the full spectrum of skills-based processes happening, someone will be hired and then the skills-based approach will stop. They’ll end up in the same old hierarchical organization structure and eventually they’ll leave.” 

Gary Eimerman, chief learning/product officer at skills-based platform provider Multiverse has also witnessed failures. “The biggest hole I see people walking into is they aren’t recalibrating and redefining the skills needed on a regular basis. They’re not actually investing in this, so they do it once, putting all that time and effort into creating a skills ontology and the skills needed,” says Eimerman. “Then, two weeks later, a new hiring manager come up with a new role and a new definition, or the role changes a quarter or six months down the road, so you end up having a gate set up in the hiring process that doesn’t match the [required] skills.” 

To avoid that fate, Eimerman advocates the use of three documents: a definition of performance for an individual, a job description, and a scorecard -- all of which are designed to work together. If at any point in time, one of those changes, so must the other two, he says. 

Bottom Line 

Skills-based hiring provides greater value to an organization and its employees when it is supported by reskilling and upskilling. Since businesses can’t simply rip and replace employees, they’re wise to understand what skills already exist, where the gaps lie and whether those gaps can be addressed with existing talent, reskilling/upskilling or candidates. 

Modern HRIS systems help by enabling the discovery and inventorying of existing skills. They also help businesses identify where the skills gaps are so they can take appropriate action. 

About the Author(s)

Lisa Morgan

Freelance Writer

Lisa Morgan is a freelance writer who covers big data and BI for InformationWeek. She has contributed articles, reports, and other types of content to various publications and sites ranging from SD Times to the Economist Intelligent Unit. Frequent areas of coverage include big data, mobility, enterprise software, the cloud, software development, and emerging cultural issues affecting the C-suite.

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