Skills-Based Hiring Is the Future of IT Staffing

Skills-Based Hiring Today

In today’s fast-paced and dynamic digital landscape, the demand for highly skilled IT professionals continues to soar. As organizations strive to stay competitive and embrace ever-evolving technological advancements, traditional hiring approaches often fall short in meeting the complex requirements of modern businesses. That’s where skills-based hiring emerges as a game-changer.

The popularity of skills-based hiring has been surging, propelled by its ability to identify candidates who possess the precise skills and experience required for specific projects or initiatives.

Large tech companies have been leading this trend. According to research from Harvard and Emsi Burning Glass, from 2017 to 2021, the share of Accenture’s IT job posts requiring bachelor’s degrees decreased from 54% to 43%. Over the same period, Apple and Google both reduced degree requirements by 16%, and by the end of the study, just 29% of IBM’s IT job posts required a degree. Other companies like Microsoft and Facebook have also announced a reduction in degree requirements in recent years. Similarly, CompTIA reported that the number of HR leaders supporting relaxed or eliminated degree requirements increased from 76% to 85% between 2021 and 2022.

The shift to skills-based hiring is not exclusive to the private sector. The Harvard study also found that the White House favors a skills-based approach when hiring IT professionals, reducing dependency on educational requirements. Additionally, in a state-wide initiative to ensure non-degree candidates are considered for roles, Maryland has implemented “or equivalent practical experience” language in more than 300 state job descriptions, resulting in a 41% increase in non-degreed new hires. Colorado and Utah’s governors have implemented similar initiatives.

LinkedIn data shows that 40% of companies rely on skills data to source and identify job candidates, up 20% from the previous year. Moreover, employers who rely on skills over degrees are 60% more likely to make a successful hire. Currently, 1 in 5 job openings posted on LinkedIn don’t require a 4-year degree.

What Is Skills-Based Hiring?

Skills-based hiring is an approach to recruitment that reduces the focus on educational requirements and past experience and instead evaluates candidates based on their skills.

Much of the recent increase in skills-based hiring is due to the shortage of tech talent exacerbated by the Great Resignation and  the growing demand for professionals to drive digital transformation projects. Studies have shown that if demand for talent exceeds supply, employers tend to de-emphasize degree requirements. While the US unemployment rate hovers around 3.7%, it is even lower in the IT sector, at 2%.

The COVID-19 pandemic has also contributed to the rise of skills-based hiring. In April 2022, employment site Indeed published the results of a survey on how the pandemic has shaped current recruiting practices and future plans. The survey revealed that companies are generally moving toward a more flexible model of recruitment. Around 59% of employers said they would consider eliminating degree requirements in the future, and 76% have begun to look at candidates from outside traditional positions or sectors. Moreover, 74% reported hiring more remote talent than before the pandemic, and 62% offer flexible scheduling options for interviews. These trends highlight a willingness to reconsider old rules and explore new alternatives.

It is important to note, according to the aforementioned Harvard study, only 27% of middle- and high-skill occupations with reduced degree requirements can be considered “cyclical resets,” or short-term shifts in response to the pandemic. The majority (63%) appear to be “structural resets,” deliberate and long-term changes to the hiring process that began prior to the pandemic.

How IT Teams Benefit from Skills-Based Hiring

The talent shortage has reached a 16-year high, with 77% of companies reporting difficulty filling open positions. In April 2023, despite a decline of 99,000 technology jobs throughout the economy, employers still listed more than 300,000 job postings for tech positions. By removing unnecessary degree requirements, employers can expand their talent pool.

For example, research by Opportunity@Work shows that of the 698,000 computer and information systems managers in the US labor force, 19% have been “alternatively trained.” However, 94% of job openings for these positions throughout 2021 required a bachelor’s degree. Alternative training includes skills learned on the job, in the military, through training programs, or at community colleges rather than from a 4-year degree – which only 40% of US workers have.  From 2000 to 2020, “degree discrimination” cost 7.4 million middle- and high-wage jobs for employees skilled through alternative routes, knows as STARs.

When employers drop degree requirements in job postings, they become more specific about the capabilities they are truly looking for. This includes spelling out the soft skills that may have been assumed to come with a college education, such as writing, communication, and attention to detail. Aligning employee competencies with their roles increases the likelihood of engagement, motivation, and higher performance, productivity, and profitability within the team. McKinsey’s research shows that hiring for skills instead of education is five times more predictive of job performance, and more than two times more predictive than hiring for work experience.

By prioritizing skill qualifications early in the hiring process and focusing on the competencies they actually need,  employers can fill vacancies faster and reduce the costs associated with advertising and recruitment. Skills-based hiring also facilitates easier training for new employees by emphasizing soft skills like trainability, and by thoroughly assessing candidates’ technical proficiencies. The traditional approach to hiring, which relies solely on the educational and work experiences listed on a resume, fails to capture the whole story, and cannot determine an employee’s performance in a new role.

It’s also worth noting that from 2015 to 2022, LinkedIn has observed a 25% change in the skillsets needed for jobs, and predicts this figure to double by 2027. As in-demand skillsets continue to rapidly evolve, hiring for skills allows employers to focus on the capabilities they need to fill both short- and long-term. With evolving skillsets, roles themselves change, warranting a different approach to sourcing, assessing, and recruiting for those positions.

How can Managers Implement Skills-Based Hiring?

Skills-based hiring can be implemented in any stage of the hiring process.

Job Descriptions

The first consideration employers can make is relaxing or removing pedigree requirements from job descriptions altogether. This not only expands the talent pool but also attracts diverse and underrepresented candidates. Additionally,  using neutral, non-gendered language in job descriptions can encourage applications from women and other minority groups. For instance, according to LinkedIn data, highlighting a job’s “responsibilities” instead of “requirements” in the description can increase 14% more applicants per view.

Sourcing

When sourcing new talent, consider expanding your channels and search parameters. Instead of using credentials as a proxy for skills, establish a framework that defines the hard and soft skills essential to each role. Recognize that there are many avenues for people to learn new skills and build expertise. McKinsey’s research goes as far to suggest developing talent pipelines as a way to build and retain skilled employees.

If resources are limited, partnering with a staff augmentation firm can streamline your organization’s access to top talent, allowing managers to focus on other initiatives.

Screening

Unconscious bias can easily impact the screening process. One way to mitigate this is by anonymizing resumes and removing certain aspects of identity and appearance from the equation. First and last names tend to be the most commonly anonymized detail, which helps mitigate gendered and racial biases. Employers have also opted to hide less obvious characteristics like address, college, and graduation year, which still hint at candidates’ backgrounds.

Another way to reduce bias is to keep subjective measures like “culture fit” out of the screening criteria. It is  understandable to seek employees who get along with existing staff and share the same values as the company, but measuring culture fit is challenging due to the differing perceptions of company culture and its constant evolution. Moreover, screening for “culture fit” fails to consider “culture adaptability,” which is the ability to learn and adapt to a company’s culture norms. Studies show that employees who can quickly conform to evolving cultural norms are more successful than those who exhibited higher cultural fit at the time of hire, suggesting that cultural alignment continues beyond the hiring stage.

Lastly, as AI becomes increasingly more integrated into the workplace, it is critical to include human intervention in algorithmic screening processes.

Interviewing

It is important to have a structured interviewing process, ensuring that each candidate is asked the same questions in the same order to evaluate them on the same criteria.

Using behavioral questions that ask candidates for examples of how they’ve demonstrated the skills and competencies on their resume is effective. Behavioral interviewing often begins with a phrase like “Tell me about a time when…” and aims to evaluate how a person thinks by asking about their steps and thought processes in an instance that called for problem solving.

Other Elements

Reference checks are a great tool to verify a candidate’s skills and accomplishments. To get a well-rounded view of the candidate, consider speaking with a former manager, a peer, and a direct report if applicable. In the absence of formal work experience, you can ask for references from former instructors, classmates, or freelance clients. During the conversation, ask references the same or similar behavioral questions you asked the candidate to gain confidence in their suitability for the role and responsibilities they are being considered for.

Many employers have also chosen to use online skill assessment platforms to measure a candidate’s mastery of the skills required for a position. For example, you might ask a software engineer to complete a coding challenge to assess their programming skills. A SHRM survey found that 79% of HR professionals regard pre-employment skills assessments as having equal or greater value than tradition hiring criteria.

Partnering with an IT consulting firm like Resource 1, you gain the advantage of working with recruiters who are well-versed in the technical skills you’re seeking. If you’re looking to identify blind spots in your hiring process while simultaneously shifting to skills-based hiring, Resource 1 can help—all while gaining access to some of the best talent in the market.

Find your next IT hire with Resource 1 today.