The benefits of skills-based hiring: A practitioner view!

Tell us a bit about yourself, about your journey so far and your current mission!

My name is Matthias from Erfurt, Germany originally and living in Berlin, Germany which I call home now for 10 years and father of a six year old daughter. I’m currently the Global Senior Director, Talent Acquisition & Employer Branding at emnify. 

As an award-winning TA Leader of the Year in 2023 in EMEA for small markets, named as Talent 100 Finalists of TA Leaders globally, and recently nominated to be one of LinkedIn's Top Voice Influencers, some people believe I’m a real industry expert in Talent Acquisition ;). 

With over 13 years of experience in Talent Acquisition in different businesses from corporate companies like Zalando, and Scout24 to smaller scale-ups like Beamery and Visual Meta, my focus areas are maturing hiring cultures, managing the transition to skill-based hiring, building a strong employer brand, data-driven TA and moving from reactive recruitment to proactive and strategic Talent Advisory. I am also the Co-Founder of TA Crunch Berlin community that builds connections and fosters inclusion among TA professionals in Berlin. My current mission is building successful companies. 

What is “skills-based hiring” and how is it different from the “non skills-based hiring”? 

For me skills-based hiring is a practice that focuses on job candidates’ observable and measurable (occupational and employability) skills relevant for the job rather than only educational credentials which brings us to pedigree recruiting or as you refer to non-skills based hiring. Pedigree recruiting does focus on privileges like degrees, former employers or universities you attend or years of working experience. Pretty much everything that does not predict future job performance and allows biased decision-making (e.g. resumes as a selection criteria).  

How does a skills-based hiring process look in practice? 

In practice, you define social skills that apply for all the hires/employees in a company and work with leaders to define hard skills that make them successful in their job without spending more time than 3 months to apply their skills in the role you are hiring for. Important, you need a shared understanding and coach your business to internalise a skills-mindset in your hiring culture. By applying the well-known  assessment practices that predict future job performance, you are almost there. Last but not least, measure your success, ensure consistency and remove resumes and as many biases as you can. Once done, think about how tooling (HR/TA tech helps you to automate skills-based assessments in your hiring process). Be tactical based on the position you are hiring for. A skills-based hiring approach is about data and evidence, no gut feeling. Make sure you keep the business accountable to tell you what good looks like high performance in the organisation or their department. 

What is your experience with skills-based hiring? 

We are currently moving our company to a skills-led organisation and I’m very happy to implement skills-based hiring for the whole company now by removing resumes step by step and exchanging them with top-funnel skills-based assessments that predict 40% future job performance. You don’t believe that? In one of our trial runs, the candidate that scored 96% in our 20 minutes top funnel assessment (before interviewing with us) was hired in the end. I know lots of TA professionals scream now but what about the bounce rate or how many candidates dropped out. Well, roughly 8% did. We had a 92% completion rate of our top funnel assessment. It’s all about the message really and we created a great candidate experience through sharing the test results and learnings with candidates who got rejected at that stage. Another great side effect is removing biases by not looking at the resumes here. I would have chosen different candidates if I only would have looked at resumes in my role as a hiring manager here. We also used structured hiring predicting 42% of future job performance with skills based interview guidelines and work sample tests that have 33% prediction. The challenge is finding a tooling that covers social and hard skills for all roles that you are hiring for. We are currently using HiPeople and start implementing it for GTM hiring around the world. 

What are the most essential benefits of this approach for the hiring organisation?

We are confronted with difficult labour markets and companies face skill and talent shortages around the world. Let’s be specific, 60% of the businesses say that skills gaps in the local labour market hold back the transformation of their business. And only 39% of businesses report a positive outlook for talent availability in the next five years (for advanced economies it’s only 20%). Overcoming these challenges, we need to change the way we attract and hire global talents around the world to expand our talent pools and contribute in a meaningful way to quality per hire by removing biases at the same time. The latest data proves that skills-based hiring improves retention rate by 10% and increases employee salaries by 25%. On top of that, companies like PwC reduced the mean hiring time by 45% and increased hiring of women in EMEA by 20% and hires with STEM or other non-finance degrees by 17%.

Where are the biggest pitfalls when applying this approach?   

You need the sponsorship and buy-in of the business. Most of the time, you get them with “I want to hire the best talents out there. No matter where they are from and what background they have.” The next challenge is human beings. Wait, what? Yes, we are all biased per default and we tend to fall for similarity bias, halo effect, confirmation and attribution bias, especially in the hiring process. Overcoming those biases is a daily struggle. Change management (omg), we enjoy working like we used to. Learning new tricks and applying a growth mindset is problematic. We just love our comfort zone too much, no? By the way, I’m not only talking about the business here. We as TA professionals are so obsessed with working like we used to (e.g. candidate experience is important, right? We are still not capable of mastering this experience for decades). Last but no least, consistency. A new strategy or idea is always nice but executing strategies (the how) is what moves the needle here. Make sure you apply the hiring approach for all the roles you are hiring for (yes, even executive search! Good luck ;)). It means you just hire candidates that enjoy solving problems and prove themselves in the hiring process. Bye-bye extroverts who are great interviewers but most of them are not great executors. 

What is the best way to start applying skills-based assessment in hiring?

Start with one role, document everything and showcase the value add to the organisation. Once you have been successful, try a new role. After 5 roles, you should have enough evidence that this is not just luck but changing the game. Ensure you have the right measure of success in place. Without being data-driven, it’s probably very hard to prove a point. And aim for more and dream big, not only skills-based hiring but going for a skills-led organisation (performance criteria, career frameworks, and workforce planning).

Are there any elements that foster the transition to skills-based hiring process? 

Leaders, communication, training, stakeholder engagement, the existing hiring culture in combination of the culture of change in our organisation. Look, hiring is a team sport. I haven’t seen any TA professionals who have hired without the hiring manager or teams. Our dependency and the belief that everyone can do our job and lack of proper education and standards in our profession is a problem. Which is why enabling and coaching leaders is the key to success. Don’t point fingers at them. Hiring is for most of them a risk based game. Avoiding mistakes that influence their success and career in the organisation is not an easy one. To influence them, your communication needs to be clear, effective and inspiring (not threatening and act like a police). One of the mistakes I see coming up very often, we forget to assess our hiring culture in the company with the combination of how change management is executed. Both areas are crucial. Changing cultures means values, behaviours and understanding the psychological aspect of human behaviours. Most TA professionals lack the skill set for such changes. #Neverstoplearning! 

How do you think the skills-based hiring will evolve in the future and is it here to stay? 

With everything in TA, people like the idea but are failing to drive change to make it happen (Do I sound cynical or gave up?). Lucky me, the way the economy works, the state of labour markets and the pressure for TA to add impact is increasing on a daily basis. Not changing to best practices like skills-based hiring will cost your job in the next 12 to 24 months. I’m not worried but I predict seeing more and more people leaving our profession because they are overwhelmed and unable to handle that change going forward. Just look at the reason why most professionals join our profession. Most of them for the wrong reason. If you don’t believe me, read this. 

Any tips on further reading/listening/watching recommendations on this topic? 

Sure. Who reads these days? Check out this LinkedIn Learning courses:

• Creating a Skills-based Organisation 

• Skills-First Talent Acquisition. 

And of course some reading materials ;) 

• How to get started with Skills-Based Hiring, 

• Right skills, right person, right role, 

• Rise of Skills-based hiring, 

• Skills-Based Hiring is on the rise, 

• Skills-Based requires a commitment of change, and

Believe me there is more - search for "skills" on WEF ;)

For more insights on skills-based hiring and Talent Acquisition - follow Matthias on Linkedin here.

---

The original post was published on the HRnuggets.io blog.