Why Skills-Based Hiring is the Future of Recruitment

The Shift Towards Skills-Based Hiring

For decades, recruitment has been built around one core principle: experience matters most. Job descriptions have prioritised years in a role, degrees, and specific career backgrounds over actual capabilities. However, this approach is no longer sustainable.

Instead, companies are shifting towards skills-based hiring—a recruitment strategy that prioritises a candidate’s skills, competencies, and potential rather than just their work history.

According to LinkedIn’s Global Talent Trends Report, companies that embrace skills-based hiring see a 60% increase in hiring efficiency and a 20% boost in workforce diversity.

So, what makes skills-based hiring so effective, and how can businesses implement it successfully?

WHAT IS SKILLS BASED HIRING?

Skills-based hiring is a recruitment approach that evaluates candidates based on their technical abilities, soft skills, and competencies rather than focusing primarily on degrees or job titles.

Instead of filtering applicants based on traditional requirements—like a Bachelor’s degree in X field or 5+ years of experience in a similar role—employers assess whether a candidate has the necessary skills to succeed in the role.

This method is particularly valuable in industries where technology is evolving rapidly, making traditional experience requirements outdated.

Example: A company looking for a digital marketing manager may prioritise SEO expertise, data analytics skills, and content strategy knowledge over whether the candidate has a marketing degree or not.

THE PROBLEM WITH EXPERIENCE BASED HIRING

Traditional hiring methods often fail to find the best candidates.

Here’s why relying solely on experience and degrees can be problematic:

1️⃣ Experience ≠ Competency

Two candidates may have the same job title for five years, but one might be highly skilled, while the other has remained stagnant.

2️⃣ Degree Requirements Limit Talent Pools

Many job descriptions exclude candidates who have the right skills but lack a formal degree. Skills-based hiring removes this barrier.

3️⃣ Overlooking High-Potential Candidates

Self-taught professionals, career changers, and those with non-traditional backgrounds often outperform candidates with linear career paths.

4️⃣ Bias in Hiring Decisions

Experience-based hiring often favours privileged groups who had access to elite schools or career opportunities. Skills-based hiring fosters diversity by focusing on ability over background.

WHY SKILLS BASED HIRING IS THE FUTURE

The workforce is evolving. AI, automation, and digital transformation have changed the skills needed in almost every industry.

🔹 76% of employers struggle to find candidates with the right skills (McKinsey & Co).

🔹 Job postings mentioning skills over degrees increased by 63% between 2019 and 2023 (Harvard Business Review).

🔹 IBM, Google, and EY have removed degree requirements from over 50% of job listings, focusing solely on skills-based hiring.

Companies that fail to adapt risk losing top talent to more progressive competitors.

HOW TO IMPLEMENT SKILLS BASED HIRING IN YOUR ORGANISATION

1. Rewrite Job Descriptions with a Skills-First Approach

Instead of listing years of experience and degree requirements, focus on core skills needed for success.

❌ Old Job Posting: “Bachelor’s degree in Finance required, 5+ years’ experience in financial analysis.”

✅ New Job Posting: “Seeking strong financial modelling and data analysis skills. Experience with Excel, SQL, or similar required.”

2. Use Skills Assessments in Hiring

Psychometric and skills assessments provide data-driven insights into a candidate’s capabilities, personality, and problem-solving skills.

🔹 Technical Skills Tests – Assess coding, marketing, or finance skills.

🔹 Cognitive Ability Tests – Measure problem-solving and learning agility.

🔹 Behavioural Assessments – Predict how candidates will perform in real-world scenarios.

Example: A software company looking to hire developers replaces resumes with a coding challenge to evaluate applicants objectively.

3. Prioritise Soft Skills & Emotional Intelligence

In 2025, soft skills will be as important as technical skills.

📢 90% of hiring managers say soft skills matter as much as hard skills (LinkedIn Talent Report).

Top soft skills to assess:

✅ Communication

✅ Adaptability

✅ Leadership

✅ Emotional intelligence

Use behavioural interviews and psychometric assessments to gauge soft skills before making hiring decisions.

4. Leverage Data & Automation in Hiring

HR technology now enables data-driven hiring that removes bias and increases efficiency.

🔹 Data can identify the best candidates based on capabilities rather than resumes.

🔹 Assessments predict job performance more accurately than traditional interviews.

Example: A logistics company struggling with high turnover uses psychometric assessments to identify candidates who are more likely to succeed in fast-paced environments.

5. Offer Continuous Learning & Upskilling

Skills-based hiring doesn’t stop at recruitment—it should be embedded into employee development.

✅ Provide online courses, mentorship, and upskilling programmes to ensure employees adapt to industry shifts.

✅ Create skills-based career progression plans that reward employees for learning new capabilities.

94% of employees say they’d stay at a company longer if it invested in their learning (LinkedIn Workplace Learning Report).

 

GET IN TOUCH

Ready to move beyond CVs and start hiring based on real skills? Testgrid’s assessment tools help businesses identify top talent, reduce hiring bias, and build high-performing teams.

If you want to talk to one of our experts about our tailored solutions, get in touch with our team here, or call 03 9040 1700 to learn more.

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